Q4 2020 Liberty Latin America Ltd Earnings Call
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And.
Okay.
And please standby and good day, everyone Youre holding for the Liberty Latin America's full year 2020, Investor call and thank you for your patience the investor call will begin shortly.
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And ladies and gentlemen, please standby.
Good morning, ladies and gentlemen, and thank you for standing by today's call is being recorded.
I'll turn the call over to Ray Cohen, Chief strategy Officer of Liberty Latin America.
Okay.
Good morning, and welcome to Liberty Latin America's full year of 2020 Investor call. At this time all participants are in listen only mode. Today's formal presentation materials can be found under the Investor Relations section of Liberty Latin America's website at Www Dot L. L. A dot com.
And today's formal presentation instructions will be given from a question answer session. As a reminder of this call is being recorded todays 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 non historical fact actual results.
May differ materially from those expressed or implied by these statements.
Additional information on factors and risks that could cause results to differ is available in Liberty Latin America's most recently filed form 10-K and.
Liberty Latin America, and disclaim 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 this call. We will refer to certain non-GAAP financial measures, which are reconciled to the low 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. Balan Nair.
Thank you Lori and welcome everybody to our full year results presentation.
I'll begin by taking your true group highlights and operating results for each of our reporting segments before closing with an overview of our strategic focus and create great one.
Chris Noyes, our CFO and Paul over the review of the company, So that's sort of performance and our outlook.
After that.
And we'll get straight to your questions.
And as always I'm joined by my executive team from across the region and I'll get them involved as needed during the Q&A.
Following our prepared remarks.
That's a point that housekeeping, we will both be working from slides, which you can find all of our website at www dot.
Dot com.
Well, let's start on slide four and those.
Highlights for the year.
Operationally, we added 170000, RG use driven by strong performance and cable and wireless and our.
A record result, and Puerto Rico, and broadband demand drove of subscriber growth of call. It double upbringing additions.
A key financial objective is to deliver positive free cash flow of 2020 and.
I am pleased to say that we generated close to $115 million.
Very challenging yet.
In terms of momentum.
Even excluding <unk> contribution.
Our results continued to improve waterfall, that's been reported revenue at a similar level to the pre COVID-19 waterborne and of <unk>.
Adjusted or EBITDA interest in fact higher than in the first quarter of the year.
We also made significant progress with our inorganic strategy.
We completed the acquisition of At&t's, Puerto Rico, and U S. Virgin Islands operations, adding over 1 billion.
Postpaid mobile subscribers to a degree.
The operations of off to a good start and I will color our integration plans in more detail.
The presentation.
Finally, we continue to lean into our investment thesis despite COVID-19.
And the addition of approximately 400000 and you are up.
Great and homes and training and training.
Over 80% of these homes passed using fiber to the home technology.
Exciting players increase of build by 50%.
In 'twenty and creatively.
Moving to slide five and of.
Summary of our quarterly fixed and mobile subscribers ads.
Starting with our fifth <unk> evolution on the left of this low.
Yeah, and you can see that we grew all of <unk> basis, each quarter throughout the year.
And the second quarter of market adjusted to the impact of a day.
All of these impacts with reduced mobility, which drove higher demand for residential data connectivity as customers increasingly worked and learn from home.
As a result of broadband adds kind of speed of over 90% of lot of net subscriber additions and the year.
We believe day as a significant opportunity to bring high speed connectivity to all households in the region.
This underpins all of organic growth strategy and the coming years.
All of the right that the slide show of mobile subscribers evolution.
Subscriber losses, and the first half of primarily the result of mobility restrictions.
And the ability of customers to access services and reduced demand for top ups generally.
Customer spend and increasing our mothers day.
Yes.
And the second half restrictions with east across most markets and we saw a recovery and subscribe and numbers. However, this did not offset of first half subscriber losses.
And I'll cover the specific trends in more detail over the coming slides.
Turning to slide six and our cable and wireless Caribbean and network reporting segment.
Note that this represents the cable and wireless segment as reported in prior quarters, However, excluding cable and wireless Panama, which we now disclose separately due to a change at all of it.
And then of Organisational structure.
This change has no impact on our borrowing groups all of the legal structure.
Starting with you argue you try it from the left and a similar evolution to the proudest slide we had a good year and fixed.
Adding over 100000 subscribers led by 92000 adds and Jamaica, which was close to free market 2019 performance.
And once again, the main driver contributing over half of Jimmy interest ads.
During 2000 and training over 80% of our Newbuild and upgrade volume at cable and wireless Caribbean and that list.
Wasn't Jamaica, which is the segment's largest market.
Mobile of steadily and recovered and the second half that's again led by Jamaica.
However, we recorded losses of the year due to second quarters adverse performance.
And the center of the Slide we presented an overview of our revenue mix and the sequential growth rates, we saw it and the fourth quarter.
All of fixed operations remained robust and mobile revenue grew as prepaid recharges continued to recover.
Subsea benefited from increased demand for international bandwidth and <unk>.
Liberty healthy sequential growth of 5%.
Finally.
<unk> service revenues.
And 2% rule of sequential overall. However, this is a tale of two different businesses without Latam of operations growing Walter incumbent Caribbean market was slightly down in the quarter.
Taking subsea, including intercompany revenue, which is eliminated in our consolidated reported.
<unk> laughed at me and they aggregate this represents of business with approximately 400 million of mainly U S. Dollar of revenue and an OIBDA margin of 50%.
Finally, I want to highlight that this segment actually grew adjusted OIBDA of Rebased basis and 23.
Despite the impact of COVID-19.
It was a great achievement by the team.
Very tough.
And yet.
Next to slide seven and cable and wireless power.
Where we experienced the most severe COVID-19 restrictions across our operations.
Create a challenging operating backdrop needing to fixed and mobile subscriber losses, and the second quarter as shown on the left of this slide which we recover it to an extent and the second half of the U S restrictions from the east.
Residential fixed business.
35000 net adds for the year.
And second half of additions more than offsetting second clause losses.
Mobile ads improved and the second half, but were impacted by increased competitive intensity and.
And did not recover losses early end of year.
Instead of depth of slide you can see that revenue from each of our products grew sequentially and the fourth quarter low.
<unk> growth of 20% was driven by some significant contract wins.
And I spoke to continue growing of fixed operations.
Our focus on expanding our product and network offerings.
The combination of with our Newbuild activity.
100000, and fiber to the home passes and for any for any of 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 potentials give it the fixed market structure and <unk>.
The strong economic environment.
Organizational changes get Panama, more senior management focus and should provide a catalyst to drive improved performance.
Turning to slide eight and of BT are a couple of D kind of segment.
Studying the evolution of the left of slide.
Previously discussed the challenges, we face and Chile all of them.
And the initial spike and bandwidth demand during the second quarter, leading to a network reliability and service issues.
We moved quickly to stabilize.
And improve customer service.
This drove better operational performance and it can be seen here, though I'd urge you and losses being asked in Q4 compared to Q3.
And really getting to flat result, and Saturday.
We see day recovery.
All of color I'll approach it in more detail of the next slide.
Of course to weaken business Cup of tea.
It continues to perform well during adding RG use and each quarter and.
18000 and aggregate during the year.
And mobile chart and the lower left represents out of business in Chile.
And we finished the year of 280000 predominantly postpaid subscribers still.
Store closures due to COVID-19, and a highly competitive market environment for most of softer performance year and second half.
Moving to the center of the slide and revenue by product.
In contrast, with the cable and wireless business fixed residential services are by far the largest product in the V. T. All of the public reporting segments contributing 90% of revenue and up 3% sequentially in Q4.
Finally, a key segment of our group strategy, and 23, and what Easter and consolidate all five of did a whole new Bill program.
Across Chile, and Costa Rica, we are planning to build more of that 400000, new homes, but you said significant uplift on the 'twenty trading activity.
On slide nine.
You wanted to highlight some of the metrics that we as a management team are focused on as we look to improve operational and.
And financial trends of BTR.
And yet the left we show significant reductions in both the Bally and number of technical calls to our representatives and.
Truck roll rate of 73% at 49% respectively.
D C Christmas fall of previously discussed targeted network and customer service and investments.
The point below the chart summarizes key pillars of the framework, we are using to approach and network and customer experience.
Additional measures of our operational improvements are presented in the Central chart would be the reduction of debt to disconnect and increase and retention rates over the past months.
Finally of the upper right, but the slide we show how our new build ambitions in 'twenty and 'twenty one capacity of prior years.
A significant and exciting step up which really the lead flow and reinforce our platform for sustained growth.
From a redone and investment perspective, we have been successful and driving down cost of pass holders with five of making these project very attractive.
Turning to slide 10, and our best performing business and Crazy Twin Liberty, Puerto Rico.
Starting with all Archie you try and sort of left up to slightly and so.
And I mentioned earlier.
And any 20th of rocket youth of the business with hundreds and 21 of the net <unk> additions.
And net ads contributed two thirds of total <unk> growth and as shown in the law of chart of broadband base grew by nearly a quarter of India.
And put this into perspective charter Comcast and all of these USA and can we get broadband subscribers by of rose eight, 9%, 7% of 4%, respectively and pretty crazy.
And instead of just a slide.
B what does it provide a view of 'twenty 'twenty and fault, Puerto Rico operations, including a full year of for the AT&T business be quiet at the end of October.
We really liked this market and as you can see.
The acquisition provides a significant step up and scale.
The combined business to one 1 billion.
Billions of revenue and all of a half a billion of adjusted OIBDA.
What is the primary reasons, we see a differentiator of converged opportunity of the important vehicle is that over 80% of our mobile service revenues coming from postpaid customers.
Finally, we continue to innovate and invest in that and it looks to maintain our leading position and put the equal.
We are rolling out of Hep D V platform and continuing to build out of footprint.
We passed $1 1 million of out of a total of one 4 million homes and Puerto Rico as at the end of 'twenty, three and plan to continue to grow.
And this is part of the assisted by the Union and Doe funding.
And what do you prove brought that speech of forty-three municipalities out of 78 and crossed yet.
Excluding San Juan and.
The other key metro areas.
On slide 11, we provide an update on our integration work and at both of our equal.
All key focus areas are.
Firstly integrate and grow as a single company.
This process began on day, one of the acquisition and be of making good progress establishing of call it and culture.
And secondly, I've talked previously about leveraging our product suite and put.
And to get a great proposition for our customers.
Yeah.
This is already happening, but well come off of each had 20% of enrollment after a weak income.
He used to grow.
The offering and boss free fixed broadband speed upgrades, if a customer its fixed and mobile services with us.
Good day, it is vital to ensure that service levels and not compromise that.
Most of new mobile calls and new operations and business support systems.
B of a comprehensive TSA agreement with AT&T to help us yet and we can.
Confident we can move to these new platforms with minimal of friction.
Fourth and something that is particularly exciting we are creating of converged player and the market, which enables us to differentiate our product offerings, but also adds resilience given the fiber backbone.
<unk> mobile net but we never have.
Fifth we have a unique opportunity to lead with digital channels and services as we create new platforms for the new business.
Overall.
I am very excited about the value because generally and for customers and other stakeholders through this acquisition.
Finally to slide 12 and us.
D G focus areas as we look to 'twenty 'twenty, one and that's it.
Well that's longer term shareholder value creation.
But.
We expect to recover and grow across all buckets at the economic backdrop improves.
And Chile, a ton of unless specifically, we anticipate better transforming the operational actions, we have taken in 'twenty and 'twenty.
Secondly, with respect to our commercial approach, we remain focused of product innovation and of distributing of hub TV product as we roll out new fiber to the whole net.
We are also developing of self install capability, which should both improve customer experience and.
And drive cost efficiencies and the future.
We will continue to lean into a prep and penetration pieces for the region and.
And upgrade of approximately 600000, mainly five because the whole homes and 23.
Do you hear of Rep and activity from 2020.
Fourth our cost focus Chris.
Crystal of doctors, another shear and more detailed in his section. However, I would note that we've made good progress since becoming a separately listed company.
And this remains an area, where we see significant potential to improve and try and bad.
But do you have any.
All of it and you get them focuses of integrating the assets acquired from AT&T.
And closing the acquisition of Telefonica, Costa Rica business.
And which we anticipate will happen.
The sum of subtype.
We see inorganic opportunities, that's a core driver of value creation and that region.
But.
Only it done at the right value.
We are very disciplined and a process to a price assets.
And accretive let of free cash flow of bullshit.
It means of key metrics.
With that.
Pass you over to Chris Noyes.
Our Chief Financial Officer, who will talk you through our financial performance.
Before we take your questions Chris.
Chris.
Thanks, Paul I'll start on slide 14 with that of our financial results two quick housekeeping items, our 'twenty and 'twenty results include Liberty model, one of my 18, and keep Puerto Rico sort of post acquisition period, which is for the last two months of Q4 and as mentioned we are now show on cable and wireless Panama as a separate operating segment, reflecting the change and reported months Howie.
Our cable and wireless credit side of that will still include CW Pea with a nice results and the upper left we reported Q4 revenue of one point of $1 billion, including $174 million and revenue from Liberty Global This compares to $975 million for Q4 2019.
Our Q4 result reflects a modest 1% year over year Rebased decline much improved versus Q2, and Q3 rebased levels driven in large part by our strong quarterly performance and Puerto Rico.
The full year, we generated revenue of $3 $8 billion from annual rebates declined 3% moving to adjusted OIBDA and posted $420 million of 4% Rebased decline for Q4, and $1 $5 billion or 2% Rebased decline and for the full year.
Liberty Global contributed $56 million of but definitely but the in the quarter Weibo's performance of the quarter inclusive of $13 million net decrementals and back from certain non recurring items, primarily related content accrual and withholding tax adjustments and disclosed in our earnings release.
And I P O J Simpson of bottom left of slide well of $188 million and Q4 or 17% of revenue.
And this was all things out of 'twenty and 'twenty totaled $631 million of 17% of revenue, which is 100 basis points lower than that of a year ago pre COVID-19 'twenty and 'twenty target.
For 'twenty 'twenty, one of their cardiac modest increase to approximately 18% of revenue for PD additions and started mentioned we are planning to build up cost of about 600.
1000 homes, and 'twenty 'twenty, one and some stats.
The increase of about 2020 and will.
And how the integration Capex and part of repurchase 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 and Q4 helped in part by a positive contribution from our newly acquired mobile operations and Puerto Rico.
For the full year, we delivered $148 million and adjusted free cash flow of comfortably achieving our COVID-19 adjusted target of positive free cash flow for 'twenty and 'twenty for 'twenty and 'twenty. One we are targeting approximately $200 million of adjusted free cash flow, which is more of a 30% increase of our 'twenty and 'twenty results.
Slide 15 highlights our continued recovery from Q2, excluding the impact of Liberty level of Q4 revenue of $923 million was nearly back to Q1 levels and all.
Q4 of adjusted EBITA of $372 million surpassed Q1, adjusted OIBDA of like 2% and we let say 'twenty 'twenty. One we expect to build momentum as 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 and an apples to apples basis typically steps down.
The general seasonal factors.
On slide 16, and present, our Q4 of financial adult and quarterly adjusted OIBDA of evolution by segment, starting on the left with C and W. Caribbean and networks and generating $428 million of revenue and of $182 million of adjusted OIBDA and Q4 year over year of Q4 revenue was 4% lower on a rebased basis.
That's 2% growth and fixed residential revenue was more than offset by COVID-19 impacts across our mobile and <unk> businesses, which were 14% and 3% lower respectfully.
As highlighted earlier, our Rebased adjusted EBITDA decline for the segment of 10% for Q4 was and due large part to roughly $13 million of net nonrecurring items.
Nike's headwind any impact of Covid C of O W. Caribbean and networks grew adjusted EBITDA by 1% for the full year, although each of those spaces and we obtained a 42% adjusted EBITDA margin. The bottom chart highlights our sequential improvement in Q4 of adjusted EBITDA result was $5 million higher than Q3 and really bad.
Back to Q1 levels moving.
Moving to our new segment cable and wireless Panama and cross L. L. A our Panama business has suffered from the bus graduate program related locked out of Q4 revenue of $131 million and of definitely but the $51 million or 19% and 313% lower and our rebased basis, respectively as compared to the prior year period.
Our year over year revenue result was driven primarily by double digit declines of <unk> to be and global.
The Q3, the business has continued to recover as quarterly adjusted EBITDA was $8 million of 19% higher and in fact at the bottom chart highlights we delivered our strongest adjusted EBITDA quarter of 2020 in Q4.
Turning to the ETR and selling Cabo Keith and Costar Loopnet, we reported Q4 revenue of $244 million, reflecting a year over year Rebased decline of 3% revenue base year over year decline was driven in large part of high volume losses, and our compressor and D. T R, which more than offset continued rebased revenue growth and coverage of that.
Thank you I'd, probably keep that closer to $89 million of adjusted EBITDA in Q4, which was 15% lower than the kind of your theory that none of them.
And those spaces.
And your decline was driven by increased operating expenses at the T. R. As we invested all of that works and customer service initiatives and to a lesser extent of eight $3 million adverse FX impact of non functional currency exposure and Chile related to the depreciation of of Chilean peso to the U S dollar sequentially the Q3 adjusted.
EBITDA was $4 million lower however, it was about $86 million posted in Q2.
Finally to our strongest performing segment and Liberty, Puerto Rico, and Darren mentioned, our business, Puerto Rico had both a strong Q4, and 'twenty and 'twenty with two months of contribution from Liberty mobile and the quarter, we delivered $296 million of revenue and $116 million, but definitely the day, plus and double digit rebased growth rates of cable business continued.
And to build momentum throughout 2020, and fact that our topline growth and Q4, excluding the impact of Liberty and mobile was the best of the roughly 15% rebates growth year over year.
This result was due in large part to all of 120000 Archie has added over the last 12 months the newly acquired business contributed $174 million of revenue and $56 million of adjusted OIBDA guide the quarter, achieving double digit rebased growth as well maybe more of those growth was primarily driven by a combination of revenue increases driven by.
And so on postpaid ARPA of positive I'll, correct roaming as well as equipment sales for 'twenty 'twenty, one and it's important to note that we expect to incur a significant immigration costs and part of it though and we began to work after three year of TSA with AT&T and operate on a standalone of basis Barry.
During 2021, we estimate that we will incur integration of operating cost of $35 million to $40 million and capex integration costs of $25 million to $30 million and tens of benefits, we anticipate generating $10 million of synergies and 'twenty 'twenty, one and the ramp towards a full run rate expectation of $70 million by the end of our integration.
Moving to slide 17, we have managed our cost and Capex day, well throughout the pandemic, our 'twenty and 'twenty efforts allowed us to maintain our adjusted EBITDA margin and that 39 of 40% range, while absorbing revenue contraction across many of our markets.
And of Liberty mobile and Q4 of compressed our full year of L. A margin by 40 basis points and really what was margin was 32% from the two months.
The Middle chart highlights, our near and 200 basis points drop and PD additions from 2019, even though we continue to invest and newbuild capacity expansion and subscriber growth the net impact of as outlined on the right hand chart that we progressed, our adjusted OIBDA of two new additions to 23% of revenue a solid increase from 2019.
And levels. This metric is a key focus of ours as we look to 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 and one point of $1 billion of availability under our Rcs. During Q4, we funded the AT&T transaction and a replay of our outstanding C and W. R. C L.
As previously highlighted our funding from the Telefonica Costa Rica acquisition was all set we already use of local borrowings of nearly 300 millions of dollars and anticipate the remainder will come from cash on hand, as well as our pro rata contribution from our local partner and Costar was done well.
Finished Q4 with gross and net rabbits at four eight times and four times, respectively, our ratios on and L. T QA basis, and 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, and terming out our debt and attractive.
We do not have and you seem to forget maturities over the next five years is about 85% of our debt is due in 'twenty and 'twenty six and beyond.
I swapped borrowing cost is and the low sixes and 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 from Trs local term loans that mature over the next two years.
Turning to slide 19, I'll wrap up all of our prepared remarks today.
And the theme from Q3, we sequentially improved both on an absolute dollar of revenue and adjusted EBITDA and maintained quarterly fixed and mobile subscriber additions.
Certainly a solid improvement from out of Q2 of Covid impacted gross and stepped down and I have highlighted today. Our collective view is that we'll continue to take time for markets to fully recover from the impacts of Covid and for Congress to return more broadly. It is also sake as two of our region and reasonably lagged the U S and terms of recovery.
And destination levels, we are managing our business for the next couple of years with that and mud weight.
As a management team are focused on what we can control grab volume and market share in a day four and service out of customers investing newbuild and transformation and continue to reset our cost base sort of benefit from incremental operational leverage is out of the markets recover and <unk>.
Currently with our ability to generate free cash flow across our operating businesses. We are committed to investing for future growth and we are targeting approximately 18% of revenue and pre any additions and 2021.
Two of our story and one that will be turned up for the coming quarters.
Anticipated beneficial impact of Liberty global and one that will underpin our free cash flow generation.
So there's a lot of immigration and coding systems work to be done, but the business came in stronger than expected and things are progressing well.
Currently closed and the culture, we can transaction of similar will strengthen our market leading cable business and we remain very excited about fixed mobile convergence and that market size.
And finally, not only are we planning for growth and revenue and adjusted OIBDA in 'twenty and 'twenty. One we will continue to drive towards higher adjusted free cash flow and our goal is to deliver approximately $200 million and 2021.
We believe this is the right balance for L. A lead and further well out of markets are recovering and 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 regarding the company's operations. Please do so by pressing the star or aspect of key.
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Well pause from only 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 and 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 it is that 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 and a half Panama report directly versus being part of cable and wireless.
Thank you.
And I'll say I think your point is right on the subsidy and from a business and.
And I think overdue Mexican waters of so we'll give you and everybody more clear line of sight and through that business, but if you kind of highlighted already.
Very good OIBDA of.
Business $400 million and revenue all U S dollars were quite excited about and asset mm.
I think over the next quarters.
You'll get more visibility to it and it's positive on Panama and I think you know Panama you can clearly see the numbers there.
And we are very focused on it and all of you have a great government partner, Dan and I'll be very excited about that part of the world and we think and Central America, Panama, and Costa Rica, and bats market can be and both of them and and you'll see when we put more of I think it is.
Probably a good thing that we're going to put more attention on Panama and and and.
And over the next quarter some of that too I think I speak to you and your.
Not to see.
Some positive outcomes.
Outcomes.
Great. Thank you.
Well now move kind of our color and 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 and look out over the next three to five years, how do you think about the evolution of your assets, both geographically as well as the product mix and you would like to have.
And.
Our country or country on average and then just secondly.
And secondly, and.
And maybe it's within this context.
And.
And your investors kind of contemplate where you May go next can you highlight where your largest priorities are in terms of scope and.
For the portfolio or where there might be just market.
And that you feel like are underpenetrated relative to their natural opportunity Scott. Thanks.
Sure sure Mike Let me start by saying, we are very happy with the.
The geography that we are currently in and.
And and I think we and the best parts of Latin America, and Central America, and the Caribbean and.
And we see quite of bit of growth and opportunity.
Broadband penetration low fixed broadband LTE penetration is low.
B to B all of it.
Play and B to B is also low so we see you know if Mike if I look over the next couple of three years, the levers of growth, whereas Sydney comes from a network of expansion comes from getting to new products and B to B, we're quite excited about that and it also comes from the fact that.
We see.
Lots of opportunities you know existing business on expanding margins in both out of Opex and Capex.
And I see that in the context of especially on Capex. It's not so much that kind of cut capex. Because we are still very bullish and building out its a cost per bill keeps getting better and better so.
You know and so there's a number of growth drivers still in front of it on our existing geography.
And where we would expand you know.
It would really depend on them and what's available out there we are very opportunistic and.
And then number of places that we like but I can clearly tell you, where we probably won't be and we weren't probably be in Argentina.
And you won't be in Venezuela.
Highly unlikely to be in Brazil.
You know.
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 of the thesis is strong.
Okay.
Thank you.
Well now move to submit this data with New Street research.
Yeah, Hi, good morning, and a couple from me. Please just first of all of them G&A and.
And you guided up on the number of claims cost and that's a pretty big.
And Kris I know some of it and.
And and Costa Rica policy and most of it is and to like can you came from just a little bit more color on biopsies and I'm kind of interested and the new expansion areas and.
What kind of areas of we're talking here and these are already existing high speed coverage of you or you couldn't be the first salaries and the and this area, which we think of Geneva and high speed product and.
And can you maybe sort of leg of pop out full penetration of these are new hardwood price should we assume a similar rate.
Over 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 just.
And just unfortunately kind of question from Chris really the the EBIT dollars, you say came on and a slightly higher number and it's only two months, it's a bit of help to kind of read too much into that maybe Pat if I annualize and that's kind of a 336 million and it's probably 10% ahead of where I was that is this the kind of a slightly higher base, we should think about going forward.
Maybe just I run logging two months of contribution thank you.
Alright.
And we'll get through both questions and I'll ask.
Game of dogs. So are you now of jumping that yeah and a bit.
You do have runway and Chile to be very promising it's true.
And at least board of my views more bills that we can do that.
The increased homes passed that we've targeted for 'twenty 'twenty, one and it's mostly because we see great opportunities and some of the B C and even from the D neighborhoods and.
And and this is mostly because we've been able to drive our cost per home passed down very low and.
And we actually where we've done trials, maybe actually gone in and we've seen decreed that sometimes two months of path, where we were at you know he and beat neighborhood. So so its quite positive and.
Let me ask gave them of if you can just add on his view.
You and on the commercial front of the new.
And your Bill.
Yeah, Thank you Paolo and and good morning.
And as Bob pointed out we see a very exciting opportunity and continue to expand and our current $3 8 million footprint.
To you know further cities and further municipalities in Chile, we already started doing that during 2020 with with close to 200, and Navy had and of 90000 and new home Saturday and you can see and in the slide deck with very positive we feel it's weird building all of our new homes and fiber to the home.
And and and and we will continue doing that.
You know, providing accessibility and and and better quality to neighborhoods that historically had not had such a you know kind of products and in the country. So we're very excited about this very exciting opportunity and also very proud of narrowing of the digital got you know of country with you something that continues to improve over time.
Thanks, Guillermo maybe Chris you can give some color on the Puerto Rico and Yeah. I think you know obviously the the two main threat that the tail end of the year.
Typically as we've seen and our other businesses Q4 tends to be of pretty strong.
Strong time for the mobile businesses and I wouldn't I wouldn't necessarily suggest you know annualized he knows to two months of.
And at this point you know we did give in our balance slide the full year 2020 number so as a as a reference point for folks on the OIBDA of revenue and OIBDA side and I would also caveat as we go into <unk> into 'twenty. One you know we do have you know the business didn't come with you now.
The back office and Standalone costs. So we you know we do and you know we will be incurring knows you know as we operate the business and as I highlighted and you know in 'twenty. One we have a pretty sizable amount of you know integration opex in.
And the business as well as Capex.
So 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 and year two year three et cetera.
So hopefully that.
It provides a little bit of color for you Mike.
That's really helpful kind of just sorry, just quickly check the free cash flow and thought he is off to all of the integration expenses of you piloted.
Most certainly it is.
Right.
Thank you.
Thanks, Rick.
And Matthew Harrigan with benchmark has her next question.
If you read the Drudge reported I guess, none of the universe footprint.
Blueprint and wanted to go back two of our Argentina, although that could actually be a liberty.
And so I think Paul and his problems bulwark and for Tony Werner background, and anywhere and kind of drawn and I was just curious when you look at five years of home and you're obviously not moving that out and the and the more out and when there is nice to know and because those were already picked off or you just see networks.
Long time ago, but you know people, where you have apples and apples and really concluded the opex capex structure, it's pretty superior and you'll just one operator, and Denmark and you clearly all PC was very pretty accurate do you have any comments there and then as you get your convergence of the technology.
All of these and the wait and see between DOCSIS and and <unk>.
Mike do you use of doctors weighted.
Low milk sockets do you feel like there's even more utility from your network for far too you know part of the use of ways off and in some of these markets, but inevitably gets mirror.
And it feels like you've got a great opportunity to have and 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, and thank you.
Matthew Hockey.
Let me, let me see break and then went back and all your questions. There one.
I'll start with the fact that we just see it's still strong.
Fiber and and Amazing network.
We are not worried at all competing with fiber to the home very happy Chelsea and I'll tell you that.
A couple of reasons one.
And the plant that we have.
For the most of them all being upgraded two one gigahertz and past. So you have tremendous amount of capacity on it.
And secondly, HFC, it's actually one of the more reliable and wellness.
Very low maintenance like network and Mike Twisted pair and all of these other metrics now of 35 of their home of obviously is.
It's 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 Fire zone.
Idiot AT&T fiber to the home of Google fiber and.
And you you were in every day and and we have been for the longest time, it's wrong no having said that all of our new builds going forward will all be five of it at all.
And that's what we'll do and and we're not doing that for any other reason and then one.
We've got the cost of price point now to read 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 and it's a matter of fact mud you went from four G backhaul, we actually run fiber directly.
Two of these sites so read from it we've always use HFC as a consumer play and.
And not necessarily a backhaul of b to B.
Okay, great. Thanks, Paul.
Yeah.
Now moving to Kevin ROE ROE equity research.
Thank you good morning.
Paul and 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.
For acquisition targets and has as COVID-19 over the past year bubbled up any new opportunities or close the doors on on some.
Sure.
Hey, Kevin.
And Panama, and let me say that.
We've always thought that mobile consolidation that makes sense and we've also all of you said to be of bike you have to have it.
And right now everybody says that they're not everybody, but at least a couple of others, but we've not been able to convince them that selling men's actually selling of the price that makes sense of everybody.
So as a result, much of moved in Panama, and but I remain optimistic over time that are you.
You know they'll get rational and and something will break loose that.
On the M&A front.
You're right, we're very disciplined and and to your question the Covid increased opportunities.
Thank all of the opportunities out there are low known and Oh no of course.
And 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 that there's quite a few metrics that we looked at but it is one of the key metrics that we look at and desk Covid give us more opportunity and makes us more cautious no I think.
All of our approach has been the same pre COVID-19 and post COVID-19, if anything on Covid and the mix it and maybe a little harder because of Nobel equity stance and and therefore, you know re tenants are judged on a capital allocation basis.
And you know and buying back stock.
More accretive to us and then making an acquisition we would do that and then and if you look at where our stock is that right now.
You know you need a pretty high hurdle.
You know do they justify allocating capital to and acquisition as opposed to you and thermal projects and that's how we look at it and and and and it's just straight math wise and.
So and and and therefore it makes it easy you know, there's there's purity and our decision making here that makes it very very very non emotional at all and in M&A.
So following up on that comment could we see share repurchases returning at some point in 'twenty and 'twenty one.
Well you know the board has authorized us.
I think from a 100 million and a few years.
And 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 puts right of course of all of its going to be you know high return and dinner projects. Maybe you know maybe you put money to work and then you thought you know inorganic activity buybacks being on that doing dividends and then.
Last two it's probably very low likelihood and and this company.
But but right now and we've done lots of exciting projects.
And you can see that you're guiding to some pretty nice free cash flow.
Very very tough.
A couple of years.
Yeah.
That's right Super Thank you both of them.
Bethany.
And we'll take our last question today from Neatness of China with a virus capital.
Hi, just extending on James's question can you just talk about the you know the subsea business and just how strategic you can see and long term I mean, if you think about that lt's USA and multiple on their fiber backbone at your $400 million and 50% EBITDA margin. It's effectively the majority of bureau of market cap.
So just if you could talk about that and do you see this absent of strategic long term or a source of funding from M&A.
Yeah.
Hello, and 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 this.
And you know of how we crystallize and and give people more clear.
Your view on the value of this asset and.
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 and outdoors as well and you know and asking the same question.
That's some of what we need to do internally. This is not an easy separation. If you want to separate the business and 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 and said, it's one of the best assets and the Caribbean and Central America and.
And it's it's great technology, a lot of growth potential in it.
We've got great customers on it and be out.
And one of the larger customers on it.
And I I think I've got them.
And my best and interest to say this but I think it's one of the best and <unk>.
Subsea network and then when you link it by the way did the beta B deals ticket often and so on the landing stations, we actually expanded and off the landing station, we've put in and sales teams, we've got and management team that runs at a it's a pretty significant business very well linked and so our sales teams can sell both and.
Like and Ethernet product of private land mine product in a country like Colombia, it'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.
And it's clear to do did the management team and I that we probably need to.
You know bring better view did that but clearly.
And there's some deposits do not reflect.
And this really valuable.
I think that'd be happy and are in our portfolio.
Thanks, Tom.
Thanks Nathan.
And that will conclude today's question and answer session I'd like to hand, the call back to Don there for any additional or closing remarks.
Thank you operator.
Well, you know I'll tell Ya 'twenty and 'twenty was probably one of the hottest years debt.
My management team and Mike.
Periods, just because the nature of where we operate.
And maybe you know we started the last year of it or at least started the pandemic period with.
Lots of good since we made the moves last year, maybe if you. If you recall, we drew down the credit lines, you would really really worried I'll tell you at the end of the year and sitting where we are right now we could not have imagined.
Being in a better spot now having said that I'll tell you of 2021 is still tough.
And we've guided of free cash flow number.
And is not entirely clear that we are out of the woods yet.
And many of them, where we operate.
Curfews and.
And the evenings.
You know of Lockdowns on on weekends and.
And so you know this is not super clear, yet and and I imagine cruise ships will not be hitting the ocean in the Caribbean and until perhaps in November after the hurricane season. This year.
Our management team is focused on of course its focus on cash collection is focused on our revenue and focus on where we can find growth and being very creative and.
Focus on getting Panama back in order to focus and getting she laid back on track. These other things of that refocus on and on the management team and we are convinced and bad debt.
And execute.
Not out of the woods, but but there's light at the end of day 10 of them.
Thank you very much for all of your support and we'll talk to you and 65 70 days.
Ladies and gentlemen, this will conclude the Liberty Latin America's full year 2020, Investor call as a reminder, and a replay of the call will be available and the Investor Relations section of Liberty Latin America's website at Www Dot.
L L Dot com.
And there you can find a copy of today's presentation materials you may now disconnect.
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