Q1 2021 Liberty Latin America Ltd Earnings Call
[music].
Good morning, ladies and gentlemen, and thank you for standing by today's call is being recorded I'll now turn the call over to John Winter, Chief Legal Officer of Liberty Latin America.
Good morning, and welcome to Liberty Latin America's first quarter 2021 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.
Following today's formal presentation instructions will be given for a question and answer session.
As a reminder, this call is being recorded.
Today's remarks may include forward looking statements.
Moving 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 or risks that could cause results to differ.
He is available and Liberty Latin America's most recently filed form 10-K and form 10-Q.
Latin America disclaims any obligation to update any of these forward looking statements to reflect any change in its expectations or and the conditions on which any such statement is based.
In addition on this call we will refer to certain non-GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation and on our Investor Relations website.
I would now like to turn the call over to our CEO Mr. Balin Nair.
Thank you John and welcome everybody to Liberty Latin America's first quarter of results presentation.
I'll begin by taking you through our group highlights and operating results before handing over to Chris Noyes, Our CFO will follow with a review of the company's financial performance.
Yeah.
After that we will get straight to your questions.
So all of these 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.
It's a point of housekeeping, we will of course.
Must be working from slides, which you can find on our website at www Dot LLE dotcom.
Well, let's start of slide four and our highlights for the quarter.
Overall, all markets of steadily recovering from the impacts of the pandemic.
However, our operating environment remains quite challenging and the first quarter with reduced tourism and general and restrictions still in place across a number of our markets.
Against this backdrop, though we had a strong start to the year bit of.
Record Q1, <unk> additions of 76000.
Group's performance was led by cable and wireless and Puerto Rico, and we were pleased to deliver growth across all of our operating segments in the quarter.
Our financial performance was also solid bid of three.
3% Rebased adjusted EBITDA growth.
This was driven by another strong quarter for Liberty, Puerto Rico, and we continue to be excited about the value we plan to create that as we integrate of fixed and mobile operations.
We previously outlined of plant Bill upgrade of approximately 600000 homes and 2021 of.
50% increase of 2020 and we delivered 130000 homes in the first quarter net.
And 98% of which we'll pivot to the whole.
Bringing high speed connectivity to more households in the region continues to be a core book because of our company.
Finally, I am happy to say that we also reported very strong first quarter free cash flow result, positioning as well Paul bogie of guidance of approximately 200 million.
Okay.
Moving to slide five of them.
Wanted to cover the first quarter highlights across our key markets before running true our performance by product category and the flow of slides.
Starting with Jamaica, which was the largest contributor of fixed and mobile ads and cable and wireless.
We are continuing to investigate and momentum here and added or upgraded over 10000 and fiber to the whole of unfolds in the quarter.
We have also successfully launched converged customer value propositions, driving a strong mobile performance.
Moving to the Bahamas tourism is starting to return with major of hotels open and a more meaningful rebound as anticipated and the second half of this year.
We've invested in our fixed net with the type of upgrades and lunch converged propositions to drive broadband adds and postpaid mobile games.
It can close that eco next this continues to be of strong fixed market place and we are constantly looking to innovate and refresh of customer propositions, focusing on increasing speeds and value to gain and retain subscribers.
The upcoming acquisition of telephonic, because mobile assets should provide an opportunity to develop attractive converged proposition spa customers and reinforce our strong position.
<unk> moved from one of my best managers chemo quantity to have oversight of Costa Rica, and the integration of these businesses.
Turning to Puerto Rico.
Focus is on integrating to quiet AT&T operations effectively and quickly good day.
And in addition to our initial welcome off of we have now launch of co branded <unk> campaign as a step towards creating a single brand and the market.
Next to Panama, and the lower left of the slide where we saw a strict lockdowns last year and some and the beginning of the year.
However, this market is going to be strong price as we start a recovery and growth for the year.
I recently moved one of them and most trusted executives, but to allow <unk> to personally and run the business and he is already making progress.
We grew both of fixed and mobile subscriber basis, and the first quarter and expect to have a good year day.
The launch of our unlimited total diesel blend from mobile additions in March.
Finally, <unk> and Chile, where there continues to be locked down during the first quarter. Despite the country being one of the global leaders and vaccination methods.
Our recent operating and financial performance have been challenge driven by the intense competition environment and Chile.
We are committed to improving performance of each year and I would highlight the following.
We need to start growing of subscriber base of Kid.
We turned the corner here in Q1 be quoting 7000, net adds pulling of 116000 losses and the second half last year.
Through our sales staff, but the.
And the rollout of hub TV significant fiber footprint expansion plans and improve customer service objectives.
Aiming to build momentum and the business and drive meaningful subscriber growth overtime.
Second we are focused on managing price to retain customers and recalibrating of cost structure through targeted efficiency initiatives.
Third we have added a new perspective of Btr's management team of debate Hemker, our former CTO of taking one of the general manager's role.
Vivek has extensive experience across the industry and a deep knowledge of technology, which will be valuable in a market, where our infrastructure expansion plans.
Key aspect of our strategy.
It will take time, but we believe the business can get back to growth and that the steps. We're taking today will also position us well as the market evolves.
Turning to slide six and our operating performance by product.
And with fixed subscriber additions.
As mentioned.
All of our operating segments reported net adds this quarter.
Taking each and thin.
Cable and wireless Caribbean and notebooks shown in the upper left reported 12% higher Q1 additions year over year, driven by continued momentum and Jamaica, where we added 22000 and <unk>.
In Panama we.
Added 10000, and RG use and expect to continue our growth throughout the year.
Liberty, Puerto Rico, and the upper corner.
All of its momentum from 2020 by adding 25000, Archie used in Q1, which was more than double the prior year period.
In Chile as mentioned, we tend to subscriber growth.
This is an improvement.
However, the market remains very competitive and additional uncertainty related to the pandemic and elections and the near term.
All of last segment Costa Rica as shown in the upper right continued its steady progression Q1, net at 9% higher than the prior year.
Led by broadband demand.
Rolling These results up to the group, we delivered record Q1 performance.
Year over year improvement in net adds driven by Puerto Rico.
A group of our poop of customers and $50 was up 1% year over year on and FX neutral basis in Q1 led by Puerto Rico and Costa Rica.
Moving to slide seven and our record Q1 mobile performance and what is typically a seasonally weak quarter.
Starting again with cable and wireless Caribbean, and Netflix and the upper left where we added 2000 and subscribers and the quarter, which was 30000 more than the prior year period.
Across cable and wireless markets, Jamaica added 10000 subscribers, including 3000 postpaid additions, which was highest in Jamaica as postpaid net adds for the fall of 2020.
Next to Panama, which generated the most ads and the quarter growing its base by 61000 net RG use this was driven by the launch of unlimited data total total equal player.
Liberty mobile and maintain a relative flat subscriber base of just over a million subscribers.
Although a small net loss was recorded in Q1, it is worth noting that within the mix, we saw growth and postpaid subscribers offset by prepaid losses.
Finally, BTR loss 6000, mobile subscribers and the quarter.
And we operate this and N V N O and Chile.
Dominantly, providing postpaid services to existing fixed subscribers and a small player and the market with just over 270000 subscribers.
Taking this all together.
55000, mobile subscribers and the quarter.
The blended our pool of $20 across the group.
The increase of 55% year over year is driven by the inclusion of Liberty mobile and Q1 2021.
Next to slide eight and of <unk> and subsea operations.
Starting with performance on the left side.
The upper graph shows just the ability in our Latam <unk> and subsea businesses over the past year.
This is driven by a lack of competitive positions and Latam b to b market and the resilience of the subsea business, which I'll come on to.
And contrast, our incumbent Caribbean and Panamanian BTB operations have faced challenges related to reduced tourism and the associated impact on local economies, maybe you operate.
As a result performance of steadily improved since the trough last year.
However, we have yet to return to pre COVID-19 levels.
On the right of the slide we wanted to highlight some of the key attributes of our subsea business.
Firstly at over 50000 kilometers of cable and net book is the most extensive in the region.
Also included of Max gifted and picked out routes, including terrestrial fiber and Columbia and part of Central America.
Secondly, you of a unique mesh network before trunk submarine cable systems.
This extensive network of differentiate our ability to provide more resilient solution and improves our economics.
Thirdly, we utilized approximately 10% of potential capacity across our network. So there is ample room to grow.
And lastly, our cables and provide an important route to the United States with over 90% of our traffic going from the Caribbean and Central America to the U S.
Demand for this connectivity is expected to continue.
Finally to slide nine.
And then overview of what we've achieved since the pandemic began and why we remain optimistic about the future.
And with last year.
We were quick to assess the potential impacts on our business from COVID-19, and we took decisive action primarily to reduce costs. So that we manage the business true potentially for a long period of financial headwinds.
As a result of the actions, we took our operational flexibility and some better market conditions, we achieved improving operating and financial performance from Q2, 2020, including generating positive free cash flow and 20th Green of clear focus.
We also closed the acquisition of At&t's operations, Puerto Rico, and U S. Virgin Islands, and that business is performing ahead of our expectations.
Chris will take you through of the strong financial performance. This operation is delivering.
Moving to the center of the slide and where we are today.
We created operating momentum and the first quarter and our focus on maintaining and building upon it.
Related to this we will continue to lean into our thesis spending of footprint and launching new products.
We focused on delighting, our customers with zero touch and frictionless experience.
And as announced earlier this week.
Of course, CEO Lorenzo will join us.
As our chief customer officer.
But we are still cautious, noting that Chile, and part of the Caribbean experienced lockdown and the first quarter.
Finally, as we look for the hit V of very optimistic.
We expect vaccinations from eight and a global recovery and facilitate more tourists into our region and.
And then improving the economic backdrop, and many of and all countries.
We've adopted our ways of working recognizing new normal created by COVID-19, and our workforce remains engaged and committed.
We remain focus on product innovation and are rolling out new products as we expand on Netflix.
And Inorganically.
A tremendous converge opportunity and Puerto Rico and are working hard to integrate the operations, we acquired from AT&T quickly and effectively.
And we are looking to close the acquisition of Delek plenty of Costa Rica assets into summer.
With that.
Pass you over to Chris Noyes, our Chief Financial Officer.
We'll talk to you through our financial performance before we take your questions.
Chris.
Thanks Pallet, beginning on slide 11, and two housekeeping items. Our Q1 2021 results include Liberty mobile for the entire quarter and given our recent executive management changes. We are now presenting probably peak out as a separate segment.
Q1, we delivered 1.1 dollars $6 billion and revenue with a year over year increase fueled primarily by the contribution from Liberty Global.
We achieved flat rebased growth year over year, which is a solid result, given many of our markets are still experiencing COVID-19 related restrictions and suffering from compressed economic activity in terms of products, we achieved rebased growth and both fixed and mobile residential revenue, which was offset entirely by continued softness and b to b.
Which has not fully recovered to pre COVID-19 levels.
Moving to adjusted OIBDA, we put us at $449 million for the quarter reporting Rebased growth of 3%, our best result, and the last four quarters.
Peony additions totaled $152 million, and Q1 or 13% of revenue, reflecting a modest dollar of increase as compared to the respect of prior year period.
Call. Our target is for 18 per cent of revenue in 2020, one, hence our standard will increase significantly and the following quarters as we accelerate our fiber builds and integration of Liberty mobile and Puerto Rico.
In terms of FCS, we reported $58 million of adjusted free cash flow for the quarter. This was out of L. A strongest first quarter and free cash flow and was fueled by Puerto Rico, and improved results and cable and wireless Caribbean and networks for the next three quarters, we expect our adjusted FCS to be primarily car.
And trade it in Q4.
Moving to slide 12, our Q1 result reflects our highest reported quarterly revenue and adjusted EBITDA for L. L. A to date and the Cherokee picks our continued recovery from Q2, 2020.
As highlighted on our 2020 year and call. We would generally had a step down from Q4 to Q1 due to seasonality factors.
However, we were able to effectively manage through those factors and obviously benefited from a full quarter of Liberty mobile, which continues to outperform our expectations and.
Accordingly, excluding the impact of Liberty mobile our Q1, adjusted OIBDA of $363 million was comparable to results and the prior year pre COVID-19 Q1 period.
Turning to slide 13, we present, our Q1 results by segment and include a year over year comparison of revenue for each segment and the bottom of half of the slot.
And then the lap with BMW of Caribbean and networks.
We posted $430 million of revenue and $181 million of adjusted OIBDA, which was in line with our seasonally strong Q4 results compared to pre COVID-19 Q1, and 2020 Rebased revenue declined by 4% and adjusted EBITDA decreased by 2%.
On a rebased revenue side, we experienced an 8% decline and residential mobile and a four per cent decline and b to be the two areas most impacted by the pandemic. However.
However, we achieved roughly flat rebased growth and residential fixed.
And by underlying strength and our broadband product.
One market you'd call out of his Jamaica, our Jamaican business accounts for more than 20% of the segment's revenue and is continuing to post year over year of rebate game.
<unk>, 6% this quarter.
Helped by lower direct and operating costs year over year, we were able to achieve and adjusted EBITDA margin of 42% this quarter and gain incremental operating leverage.
<unk> additions were $50 million of 12 per cent of revenue, including over 20000 homes built or upgraded in the quarter.
Moving to cable and wireless Panama Q1 revenue of $122 million and adjusted OIBDA of $44 million were 11% and 3% lower on a rebased basis, respectively, and peony editions were $11 million of 9% of revenue, including over 20000 homes built or upgraded.
Two key points to highlight first C. W. P is mitigated much of the COVID-19 impacted revenue declined two day, reducing both its direct and operating costs year over year and second as of year continues we are poised to deliver much improved performance.
Turning to the middle of the Slide Liberty, Puerto Rico was once again, our strongest segment, we generated $361 million of revenue or 14% rebased growth as compared to Q1 and 2020.
Our historical cable business delivered rebased revenue growth of roughly 20% year over year, and we have increased our total RG use day by an impressive 17% over the last 12 months.
Turning to our newly acquired business from AT&T. This business contributed $240 million of revenue in Q1, delivering rebased revenue growth of 11%. This growth was fueled in large part by strong equipment sales and to a lesser extent improved service revenue.
For Q1 hour of adjusted OIBDA was $150 million and increase of about $100 million over what we reported in last year's Q1. Our Q1 result reflects rebased adjusted OIBDA growth of 26% importantly, as we flagged on the Q4 call, we expect to incur sizeable integration costs in 2020 one.
And that will adversely impact our adjusted EBITDA. These costs were minimal in Q1 and are expected to ramp substantially and the next three quarters.
In terms of <unk> additions, we reported $34 million of 9% of revenue in Q1, we expect that our standard will significantly increase throughout the rest of 2021 due in large part of the timing of our integration projects and new builds.
P T R. As highlighted in the fourth column, we reported Q1 revenue of $210 million and adjusted EBITDA of $71 million, reflecting rebased declined to 8% and 20% respectively.
Key drivers of full year of carryover impact from the subscriber losses, we experienced particularly in the second half of last year, which will impact our comparables in 2021.
Additionally, the intense competitive landscape is negatively impacting our pool of it.
Besides of the flow through of impact of revenue declines certain of our costs remain elevated due to high levels of customer activity.
However, we continue to work on reducing our fixed costs and address the labor component to of restructuring late in Q1.
P and editions were $47 million of 22 per cent of revenue, including over 75000, new homes and increase of 160% over last year's Q1.
Finishing with Cabo Teekay and Costa Rica, obviously post completion of the Telefonica acquisition. This business will be much larger but out of standalone basis kind of boutique of reported revenue of $36 million and adjusted OIBDA of $40 million with both metrics, reflecting year over year rebased growth in the mid teens.
Our <unk> additions were 20 per cent of revenue and included over 5000, new fiber homes constructed.
This next slide will discuss the current status of our balance sheet and liquidity and Q1, we reported $8 $9 billion of total debt $1 $3 billion of cash and $1 $2 billion of availability under our revolving credit line.
We anticipate using approximately $200 million of our cash to fund our share of the equity component of the Telefonica Costa Rica purchases later this summer.
In terms of leverage we had consolidated gross leverage of five times and net leverage of four three times, we were extremely active during March and successfully tapped the capital markets and two transactions.
Which further strengthened our balance sheet and reduced our borrowing costs.
First we issued $410 million a year.
437, and 5% senior secured notes at ETR. The proceeds were primarily used to repay btr's 2020 three term loans and repay a portion of the Trs.
And the 8% notes.
Second we raised $1 $3 billion of debt and Puerto Rico, and repaid out of our existing $1 billion term loan we issued $820 million of eight year senior secured notes at five and and 8% over 150 basis points better than our funding for the acquisition 18 months ago.
And we issued a new $500 million term loan at LIBOR, plus 375, which was 125 basis points of tighter than how repay term loans.
As part of this refinancing we raised $250 million of incremental capital. Furthermore, as a result of these two opportunistic refis and our average debt tenor improved with over 80 per cent of our debt now due in 2027 Court later as the bottom right chart highlights wrapping.
Wrapping up on slide 15, our consolidated <unk> results were ahead of our own expectations for the quarter No doubt, Chile will remain challenging for us for the foreseeable future, it's bound and discussed but our other off market, especially of Puerto Rico are picking up the slack and.
As seen by our remarks today the region of which we operate will continue to be adversely impacted by the global pandemic and we expect economic recovery across many of our markets to take well beyond 2021.
Our strategy remains clear, we are investing now and our businesses, especially and fiber technology and capacity driving fixed and mobile subscriber growth.
Focusing on digital transformation cost control and business process efficiencies.
And working methodically on the Liberty mobile integration.
All of these actions will position us to capitalize on improving market conditions, and we remain confident and our ability to deliver positive year over year revenue and adjusted OIBDA Rebased growth and meet our Capex and free cash flow guidance targets with that operator, we are ready to take questions.
Thank you for the question and answer session will be conducted electronically.
And would like to ask a question regarding the company's operations. Please do so by pressing the star or Astra key followed by the day trip one on your Touchtone telephone.
In order to accommodate everyone we.
We request that you only ask one question with one follow up if needed.
If you were using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Well pause for just a moment to give everyone an opportunity to signal for question.
We'll take our first question from Sumit <unk> New Street research.
Yeah.
Oh.
Please go ahead your line is open Mike.
Mike.
Oh, sorry, and I think I was on mute.
Yeah two of three quick questions. Please and just on subsea cable first of all.
And so it went up takes a toll on on a monetization process you suggested U S book, beginning to look into that but the full year's and I just wondered if there was any kind of.
Update there please.
And secondly could you just refresh thinking on the potential buyback, obviously, you're still looking to stay.
$200 million of equity free cash flow. This year I just wanted to get a quick update from your thinking about cash returns. Please and then just finally.
And I guess this might take a little bit longer but just on Chile.
I was just you know how big and looked at some of the price points and the market.
And obviously some of the peers or kind of quite cheap and of thank you you mentioned about and the and the remarks, Mike just wanted to really you know what.
What really can you do when you have some very kind of aggressive cheap competition coming in how can you differentiate yourselves.
You know, it's difficult to kind of didn't come and operate to defend against that but love to hear a little bit more about.
And what you can do against some of those as part of aggressive price points. Thank you.
Yeah.
Good morning Sumit.
So let me address your three questions subsea cable and we've been doing a lot of work and the last couple of months of couple of three months.
And you know I'm separating the business out.
Rob book legally and financially that town and trying to reallocate the cost and mixture of that we have a clear line of sight and did that as a standalone business.
And my sense is that you know will be going through a bunch of different deliberations internally and our company on that but clearly from a sum of the part perspective.
This asset is actually quite an amazing assets and.
And we will come back to you and the large investment community over the next few months.
And any strategic direction.
That's different and what we've kind of hinted at in the past on.
And on the buybacks you know the board has approved a buyback.
Process, and and we did do some buyback stock and pretty grim and will be kind of opportunistic and this matter if and when.
And when we see you know.
The equity tradeoffs listen the jump in but we we remain opportunistic and upfront and.
And then Chile, I think you read it right that you know this is a highly competitive market I mean, we've been in this market for a long time and we've always had it very competitive.
We used to go up again, a lot of modest.
And and I did and I've said it before of many years ago of couple of years ago that we compete very fiercely against these other three book.
And the in the and the last six to nine months and you've got more entrants come into the market and you saw that so that even of wholesale regime.
And pricing has been disrupted and in that marketplace and the way we look at the you look at your front book and your acquisition price thing and then you look at what you have and your back book and.
And Vivek who's our general manager of them, that's been very actively looking at both and trying to normalize the front book back book and that's clearly when you look at the front book and you look at there of growth that I mean, uprights and is working.
Now we do have some parts of our Oh Oh base.
On some legacy pricing that we would.
Eventually have to adjust and.
And and then we're not afraid to do that.
And so there's a lot of analysis of going into pricing right now.
I think we have a very competitive product and like I said of front book, that's working really well.
No and since you asked the question on Chile, I'm going to ask.
Any of our competitors do so I think combined we combine all of that we've been able to compete and this market and of really good range.
Thanksgiving.
So you're on a quick stops for Super helpful. Thank you very quick follow up and it may be sensitive, but can you give any sense of to the back book from the book differential is it kind of some of extreme or was it just need a bit of tweaking.
And it's not extreme at all of this as a matter of fact of day, you know just sort of one number of more but more than 60% of the of back book has already total front book and then the remaining one is big gap and thank you do not that way.
Okay. That's great. Thank you.
As a reminder of star one if you would like to ask a question.
And I'll take our next question from James Ratcliff Evercore ISI.
Great. Thanks for taking the question of too if I could.
First of all of the follow up on Chilly can you just talk about the status of the BTR brand at this point and.
From what degree of COVID-19 experience of impact of that and your relative brand fish and versus either providers and how you rebuild that advantage and secondly, any thoughts.
Guarding the restructuring at Tel Aviv and.
And the potential appeal of the Mexican market now and get your chairman system of Televisa Board Curie.
Curious, how that that could that and market could potentially stick and tier and you're thinking about footprint expansion. Thanks.
Sure.
Let me, let me and said Televisa when president and I'll pass it on to moving under under retail brands.
Really as of Televisa primary of Big Reclosable of go through.
With a group group Televisa and Alfonso who is the CEO that sits on our board and.
And.
But they did a really amazing transformational deal of themselves and and then what's in the future I think.
Lots of speculation, but right now.
Focus is running a business.
And and that's how how are we looking at it. So vivek you wanted to enter the BTR brand yes.
Of course, <unk> had a very good brand and chilly over the years, we did have a little bit of a brand impairment last year, given our network issues, but when I look at relative brand impairment compared to all of the other providers and I think we're roughly still in the same boat.
[music].
[music].
Good morning, ladies and gentlemen, and thank you for standing by today's call is being recorded Oh now turn the call over to John Winter, Chief Legal Officer of Liberty Latin America.
Good morning, and welcome to Liberty, Latin Americas first quarter 2021 investor call.
At this time, all participants harmless and the old.
Mode.
Baseball presentation materials can be found under the Investor Relations section of maybe.
Of the Latin America's website at Www Dot L. L E Dot com.
And today's formal presentation instructions will be given for a question and answer session.
As a reminder, this call is being recorded.
Today's remarks May include forward looking statements, including the companies of expectations with respect to its outlook and future growth prospects and other information and statements better not historical fact.
Actual results may differ materially from those expressed or implied by these big.
Additional information of factors are rest of that could cost results to differ is available and Liberty Latin America's most recently filed form 10-K and form 10-Q.
Latin America disclaims any obligation to update any of these forward looking statements to reflect any change and its expectations.
Or and the conditions on which and he said statement is based.
In addition on this call and we will refer to certain non-GAAP financial measures, which of reconciled to the most comparable GAAP financial measures, which can be found and the appendices to this presentation and on our Investor Relations website I.
Oh, and now like to turn the call over to our C. E O. Mr of balance now.
Thank you and welcome everybody and Liberty Latin Americas, plus quite of results presentation.
Moving to slide five.
I wanted to cover the first quarter highlights across our key markets before running true up performance by product category and the following slides.
Starting with Jamaica, which was the largest contributor of fixed and mobile AD and cable and wireless.
We are continuing to investigate and momentum here and added or upgraded all of them.
<unk> thousand and fiber to the home homes in the quarter.
We have also successfully launched converged customer value propositions, driving a strong mobile performance.
Moving to the Bahamas tourism is starting to return with major of hotels now open and a more meaningful rebound as anticipated and the second half of this year.
We've invested and our fixed network the type of upgrades and lunch converged propositions to drive broadband adds and postpaid mobile games.
Sticking close that Eco next day.
This continues to be of strong fixed market force and we are constantly looking to innovate and refresh on customer propositions, focusing on increasing speeds and value to gain and retain subscribers.
The upcoming acquisition of telephonic, because mobile assets should provide an opportunity to develop attractive converged propositions for our customers and reinforce our strong position.
I've moved one of my best managers chemo quantity to have oversight of Costa Rica and.
And the integration of these businesses.
Turning to Puerto Rico, our focus is on integrating the quiet AT&T operations effectively and quickly.
And in addition to our initial welcome offer we have now launch on core branded <unk> campaign as a step towards creating a single brand in the market.
Next to Panama, and the lower left of the slide where we saw a strict lockdowns last year and some in the beginning of the year. However.
However, this market is going to be strong price as we start a recovery and growth for the year.
I recently moved one of my most trusted executives that's allowed <unk> to personally and run the business and he is already making progress.
We grew both of fixed and mobile subscriber basis, and the first quarter and expect to have a good year there.
The launch of our unlimited total diesel plant growth.
From mobile additions and March.
Finally, <unk> and Chile, where there continued to be locked down during the first quarter. Despite the country being one of the global leaders and vaccination methods.
Our recent operating and financial performance have been challenge driven by the intense competition environment and Chile.
We are committed to improving performance of each year and I would highlight the following.
Yes.
You need to start growing of subscriber base again.
We turned the corner here in Q1 recording 7000, net adds and following a 116000 losses and the second half last year.
Through our sales staff, but.
The rollout of hub TV significant fiber footprint expansion plans and improve customer service objectives.
We are aiming to build momentum and the business and drive meaningful subscriber growth overtime.
Second we are focused on managing price to retain customers and recalibrating of cost structure through targeted efficiency initiatives.
Good.
Of added a new perspective of Etfs management team that David Hemker, our former CTO of taking one of the general manager's role.
Vivek.
And sort of experience across the industry and a deep knowledge of technology, which will be valuable in a market, where our infrastructure expansion plans and a key aspect of our strategy.
It will take time, but we believe the business can get back to growth and that the steps. We are taking today will also position us well as the market evolves.
Turning to slide six and our operating performance by product type.
Starting with fixed subscriber additions.
As mentioned.
All of our operating segments reported net adds this quarter.
Taking each and thin.
Plus cable and wireless Caribbean and networks shown in the upper left reported 12% higher Q1 additions year over year, driven by continued momentum and Jamaica, where we added 22000 and RG use.
And Panama, we added 10000, RG use and expect to continue our growth throughout the year.
Liberty, Puerto Rico, and the upper corner.
And 3000, postpaid additions, which was higher than Jamaica as postpaid ads for the all of 2020.
Next to Panama of each generated the most ads and the quarter growing its base by 61000 net RG use this was driven by the launch of unlimited data total total Eagle plant.
Liberty mobile and maintain a relatively flat subscriber base of just over a million subscribers.
Although a small net loss was recorded in Q1, it is worth noting that within the mix, we saw growth and postpaid subscribers offset by prepaid losses.
Finally V T. Our loss 6000 mobile subscribers and the quota.
We operated and N B N O in Chile.
Dominantly, providing post trade services to existing fixed subscribers and a small and play in the market with just over 270000 subscribers.
Taking this all together.
55000, mobile subscribers and the quarter with a blended our pool of $20 across the group.
The increase of 55% year over year is driven by the inclusion of Liberty mobile and Q1, 2020 one.
Next to slide eight and our <unk> and subsea operations.
Starting with performance on the left side.
The upper graph shows the stability in our Latam b to B and subsea businesses over the past year.
This is driven by a pack of competitive positions and Latam b to b market and the resilience of the subsea business, which I'll come on to.
And contrast, our incumbent Caribbean and Panamanian BTB operations have faced challenges related to reduced tourism and the associated impact on local economies, maybe you're operating.
As a result performance has steadily improved since the trough last year.
However, we have yet to return to pre COVID-19 levels.
On the right of the slide we wanted to highlight some of the key attributes of our subsea business.
Firstly at over 50000 kilometers of cable on net book is the most extensive in the region.
Before so included of math gifted and picked out of routes, including terrestrial fiber and Columbia and part of Central America.
Secondly, if of unique mesh network before trunk submarine cable systems.
This extensive network of differentiates our ability to provide more resilient solution and improves our economics.
Thirdly, we utilized approximately 10% of potential capacity across our network.
There is ample room to grow.
And lastly, our cables and provide an important route to the United States with over 90% of our traffic going from the Caribbean and Central America to the U S.
Demand for this connectivity is expected to continue.
Finally to slide nine.
And then overview of what we've achieved since the pandemic began and.
And why we remain optimistic about the future.
Starting with last year.
We were quick to assess the potential impacts on our business from COVID-19, and we took decisive action primarily to reduce costs. So that we manage the business true of potentially for a long period of financial headwinds.
And so resolves the actions we took.
And our operational flexibility and some better market conditions, we achieved improving operating and financial performance from Q2, 2020 <unk>.
<unk> generating positive free cash flow and 20th Green of.
A clear focus.
We also closed the acquisition of At&t's operations, Puerto Rico, and U S. Virgin Islands, and that business is performing ahead of our expectations.
Chris will take you through of the strong financial performance. This operation is delivering.
Moving to the center of the slide and where we are today.
We created operating momentum and the first quarter and our focus on maintaining and building upon it.
Related to this and we will continue to lean into our thesis spending of footprint and launching new products.
We focused on delighting, our customers with zero touch and frictionless experience.
And as announced earlier this week from.
Our CEO Lorenzo will join us.
As our chief customer officer.
But we are still cautious, noting that Chile, and part of the Caribbean experienced lockdown and the first quarter.
Finally, as we look for their hit V of very optimistic.
We expect vaccinations and eat and the global recovery and facilitate more tourism to our region and.
And then improving the economic backdrop, and many of and all countries.
We've adopted our ways of working recognizing new normal created by COVID-19, and our work force remain engaged and committed.
We remain focused on product innovation and are rolling out new products as we expand on Netflix.
And Inorganically.
A tremendous converge opportunity and Puerto Rico and are working hard to integrate the operations, we acquired from AT&T quickly and effectively.
And we are looking to close the acquisition of Dallas plenty of cause of Costa Rica assets into summer.
With that.
Pass you over to Chris Noyes, our Chief Financial Officer.
And we'll talk to you true of financial performance before we take your questions.
Chris.
Thanks balance beginning on slide 11, and two housekeeping items, our Q1 'twenty 'twenty. One results include Liberty mobile for the entire quarter and given our recent executive management changes, we are now presenting <unk> as a separate segment.
Q1, we delivered $1.16 billion and revenue with a year over year increase fueled primarily by the contribution from Liberty Global.
We achieved flat rebased growth year over year, which is a solid result, given many of our markets are still experiencing COVID-19 related restrictions and suffering from compressed economic activity in terms of products, we achieved rebased growth and both fixed and mobile residential revenue, which was offset entirely by continued softness and b to b.
Which has not fully recovered to pre COVID-19 levels.
Moving to adjusted OIBDA, we posted $449 million for the quarter reported rebased growth of 3%, our best result, and the last four quarters.
Peony additions totaled $152 million, and Q1 or <unk> 13 per cent of revenue, reflecting a modest dollar of increase as compared to the respect of prior year period.
Call of our target is for 18 per cent of revenue in 2020, one, hence our spend will increase significantly and the following quarters as we accelerate our fiber builds and integration of Liberty model and Puerto Rico.
In terms of FCS, we reported $58 million of adjusted free cash flow for the quarter. This was L. L. A strongest first quarter and free cash flow and was fueled by Puerto Rico, and improve results and cable and wireless Caribbean and networks and then.
Next three quarters, we expect our adjusted F. C F to be primarily concentrated in Q4.
Moving to slide 12, our Q1 result reflects our highest reported quarterly revenue and adjusted EBITDA for L. L. A to date and the chart depicts our continued recovery from Q2, 2020 and.
As highlighted in our 2020 year and call. We would generally have a step down from Q4 to Q1 due to seasonality factors. However, we were able to effectively manage through those factors and obviously benefited from a full quarter of Liberty mobile, which continues to outperform our expectations importantly, excluding the impact of live.
And in mobile our Q1, adjusted OIBDA of $363 million was comparable to results and the prior year pre COVID-19 Q1 period.
Turning to slide 13, we present, our Q1 results by segment and include a year over year comparison of revenue for each segment and the bottom half of the slot.
Starting on the left with BMW of Caribbean and networks, we posted $430 million of revenue and $181 million of adjusted OIBDA, which was in line with our seasonally strong Q4 results compared to pre COVID-19 Q1, 2020, Rebased revenue declined by 4% and adjusted OIBDA.
<unk> decreased by 2% on.
And the Rebased revenue side, we experienced an 8% decline and residential mobile and of 4% decline and b to B two areas most impacted by the pandemic.
However, we achieved roughly flat rebased growth and residential fixed.
And by underlying strength and our broadband product.
One market to call out as Jamaica, our generic and business accounts for more than 20% of this segment's revenue and is continuing to post year over year of Rebased gain Gras.
<unk>, 6% this quarter.
Helped by lower direct operating costs year over year, we were able to achieve and adjusted EBITDA margin of 42% this quarter and gain incremental operating leverage.
<unk> additions were $50 million of 12 per cent of revenue, including over 20000 homes built or upgraded in the quarter.
Moving to cable and wireless Panama Q1 revenue of $122 million and adjusted OIBDA of $44 million were 11% and 3% lower on a rebased basis, respectively, and peony editions were $11 million of 9% of revenue, including over 20000 homes built or upgraded.
Two key points to highlight first C. W. P is mitigated much of the COVID-19 impacted revenue declined two day, reducing both its direct and operating costs year over year and second as of year continues we are poised to deliver much improved performance.
Turning to the middle of the slide Liberty, Puerto Rico as once again, our strongest segment, we generated $361 million of revenue were 14% rebased growth as compared to Q1, 2020.
Our historical cable business delivered rebased revenue growth of roughly 20% year over year, and we have increased our total RG use day by an impressive 17% over the last 12 months.
Turning to our newly acquired business from AT&T. This business contributed $240 million of revenue in Q1, delivering rebased revenue growth of 11%. This growth was fueled in large part by strong equipment sales and to a lesser extent improved service revenue.
For Q1, our adjusted OIBDA was $150 million and increase of about $100 million over what we reported in last year's Q1. Our Q1 result reflects rebased adjusted OIBDA growth of 26% importantly, as we flagged on the Q4 call, we expect to incur sizeable integration costs in 2020 one.
And that will adversely impact our adjusted OIBDA. These costs were minimal in Q1 and are expected to ramp substantially and the next three quarters.
In terms of Teeny addition, we reported $34 million of 9% of revenue in Q1, we expect that our spend will significantly increase throughout the rest of 2021 due in large part of the timing of our integration projects and new builds.
P T R as highlighted in the fourth column.
We reported Q1 revenue of $210 million and adjusted EBITDA of $71 million, reflecting rebased declined to 8% and 20% respectively.
Key drivers of full year of carryover impact from the subscriber losses, we experienced particularly in the second half of last year, which will impact our comparables in 2021.
Additionally, the intense competitive landscape is negatively impacting our pool of.
Besides the flow through of impact of revenue declines certain of our costs remain elevated due to high levels of customer activity.
However, we continue to work on reducing our fixed costs and address the labor component to of restructuring late in Q1.
<unk> additions were $47 million of 22 per cent of revenue, including over 75000, new homes and increase of 160% over last year's Q1.
Finishing with Cabo Teekay and Costa Rica, obviously post completion of the Telefonica acquisition. This business will be much larger but on a standalone basis kind of boutique of reported revenue of $36 million and adjusted OIBDA of $40 million with both metrics, reflecting year over year rebased growth and the mid teens or.
Our <unk> additions were 20 per cent of revenue and included over 5000, new fiber homes constructed.
This next slide we will discuss the current status of our balance sheet and liquidity and Q1, we reported $8 9 billion of total debt $1 $3 billion of cash and $1 $2 billion of availability under our revolving credit line.
We anticipate using approximately $200 million of our cash to fund our share of the equity component of the Telefonica Costa Rica purchase later this summer.
In terms of leverage we had consolidated gross leverage of five times and net leverage of four three times.
We were extremely active during March and successfully tapped the capital markets and <unk> transactions.
Which further strengthened our balance sheet and reduced our borrowing costs first we issued $410 million eight year 437, and 5% senior secured notes at ETR. The proceeds were primarily used to repay btr's 2020 three term loans and repay a portion of the Trs.
And the 8% notes.
Second we raised $1 $3 billion of debt and Puerto Rico, and repaid out of our existing $1 billion term loan we issued $820 million of eight year senior secured notes at five and 10, 8% over 150 basis points better than our funding for the acquisition 18 months ago.
And we issued a new $500 million term loan at LIBOR, plus 375, which was 125 basis points of tighter than our repay term loan and.
As part of this refinancing we raised $250 million of incremental capital. Furthermore, as a result of these two opportunistic refis are average debt tenure improved with over 80% of our debt now due in 2027 or later as the bottom right chart highlights.
Wrapping up on slide 15, our consolidated <unk> results were ahead of our own expectations for the quarter.
No doubt, Chile will remain challenging for us for the foreseeable future is bound and discussed but all our other markets, especially Puerto Rico are picking up the slack.
As seen by our remarks today the region in which we operate will continue to be adversely impacted by the global pandemic and we expect economic recovery across many of our markets to take well beyond 2021. However, our strategy remains clear, we are investing now and our businesses, especially and fiber technology and capacity.
Driving fixed and mobile subscriber growth.
Focusing on digital transformation cost control and business process efficiencies.
And working methodically on the Liberty model integration.
All of these actions will position us to capitalize on improving market conditions, and we remain confident and our ability to deliver positive year over year of revenue and adjusted OIBDA Rebased growth and meet our Capex and free cash flow guidance targets with that operator, we are ready to take questions.
Thank you Mike question and answer session will be conducted electronically.
I'd like to ask a question regarding the company's operations. Please do so my question and the star of our Astra key followed by the day one on your Touchtone telephone.
In order to accommodate and everyone.
We request that you only ask one question with one follow up if needed.
If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to return of equipment.
We'll pause for just a moment to give everyone an opportunity to signal for question.
We'll take our first question from Sumit <unk> New Street research.
Yeah.
Oh.
Please go ahead your line is open Mike.
Mike.
Oh, I'm, sorry, and it goes on mute.
Yeah, two or three quick questions. Please just on subsea cable first of all.
Is there enough takes a toll on on a monetization process you suggested U S book, beginning to look into that but the full years and I just wondered if there was any kind of update.
<unk> please.
And secondly could you just refresh thinking all of them, but the potential buyback, obviously youre still looking to do $200 million of equity free cash flow. This year I just wanted to get a quick update on your thinking.
About cash returns. Please and then just finally and I guess this might take a little bit longer but just on Chile.
I was just you know how big of a look of some of the price points and the market.
And obviously some of the peers or kind of quite cheap and us and cute and you mentioned above and the and the remarks, but just wanted to really you know what.
What really can you do when you have some very kind of aggressive cheap competition coming in and how can you differentiate yourselves.
And you know it's difficult to kind of incumbent operator to defend that kind of stuff, but I'd love to hear a little bit more about.
And you can do against some of those as part of aggressive price points. Thank you.
Yeah.
Good morning Simeon.
So let me address your three questions subsea cable and we've been doing a lot of work and the last couple of months of couple of three months.
And you know I'm separating the business out.
Rob book legally and financially that town and trying to reallocate the cost and mixture of that we have a clear line of sight and do that as a standalone business.
And my sense is that you know will be going through a bunch of different deliberations internally and our company on that but clearly from a sum of the parts perspective.
This asset is actually quite an amazing assets and.
And and we'll come back to you and and the large investment community over the next few months.
And any strategic direction.
So it's different and what we've kind of hinted at in the past.
On the buybacks you know the.
<unk> has approved a buyback.
Hmm.
Process and and.
And we did do some buybacks back and pretty grim and will be kind of opportunistic and this matter if and when.
And we see you know them.
Equity trades off our books and the jump in but we we remain opportunistic and upfront.
And then Chile, I think you read it right that you know this is a highly competitive market I mean, we've been in this market for a long time and we've always had it very competitive.
We used to go up again lot of modest and.
And I think I've said it before of many years ago of couple of years ago that the recompete.
And we compete very fiercely against these other three book now and the in the and the last thing.
The nine months and you've got more entrants come into the market and you saw that.
Even though wholesale regime and.
And pricing has been disrupted and in that marketplace and the way we look at the you look at your front book and your acquisition price thing and then you look at what you have and you back.
Book.
And Vivek who's our general manager of them, that's been very actively looking at both and trying to normalize the front book and back book. That's clearly when you look at the front book and you look at their growth that I mean, the pricing is working.
Now we do have some parts of.
Oh and boost that bill on some legacy pricing that we would <unk>.
Eventually have to adjust and.
And and then we're not afraid to do that so there's a lot of analysis of going into pricing right now.
I think we have a very competitive product and like I said of front book, that's working really well.
No and since you asked the question on Chile, I'm going to ask.
Our new general manager and Chile, Vivek who's been on the you know on the job here for the last two.
And two months now and maybe you can share some of this perspective from that yes.
Thanks, Paul and.
Thanks, So much for the question, Yeah, I would think.
And I pointed out from a pricing standpoint.
Our Q1, 2020 one's been a really good gross adds so there's clear demand for our product.
There's definitely market continues to grow and and that pricing is working.
We just need to adjust some of the back book pricing and manage churn and I think he also asked how do we expect to compete and a market. The pricing is still low and I think the focus of there'll be on product.
And whether it is on network customer experience our video product speed.
Basically the focus on how they're going to continue to compete in this market and we do believe we have a very compelling product and and offering a great footprint and.
And be passed more homes and any of our competitors do so I think combined and we combine all of that to continue to compete in this market and a really good day.
Thanks, David.
So you're on a quick start from Super helpful. Thank you very quick follow up may be sensitive, but can you give any sense of the price.
Book Front book differential is it is it kind of somewhat extreme or was it just need a bit of tweaking.
It's not extreme at all of this matter of fact that they you know just sort of one number but more than 60 per cent of the of.
The back book is already booked upfront book and then the remaining one of the GAAP effective and not that one.
Okay. That's great. Thank you.
As a reminder, star one if you would like to ask a question.
Our next question from James Ratcliffe of with Evercore ISI.
Great. Thanks for taking the question of two if I could.
First of all of the follow up on Chile can you just talk about the status of the PTR brand at this point and.
And.
To what degree of the COVID-19 experience of impact of that and you're out of brand position versus other providers and how you rebuild that advantage.
And secondly, any thoughts are regarding the restructuring at Televisa and the potential appeal of the Mexican market.
And Victor your chairman since from the Televisa Board.
Curious how that that could that market could potentially fit into your thinking about footprint expansion. Thanks.
Sure, Let me, let me and the Televisa and first and then I'll pass it on to Vivek on the retailer brands.
Really of Televisa front of everybody.
We closed of course.
Group of Televisa and Alfonso Who's the CEO of that sits on our board and.
And.
But you know they did a really amazing.
The mention of the deal themselves and and then what's in the future I think.
Lots of speculation, but right now our focus of running our business.
And and that's how we're looking at it so vivek you want to answer the BTR Brian.
Yeah.
<unk> had a very good brand and chill it over the years, we did have a little bit of a brand impairment last year, given our network issues.
When I look at relative brand impairment compared to all of the other providers I think we're roughly still in the same boat.
As an industry and we all have work to do to improve our brand so.
We have to reposition our brand and I think we'll do that with our product and our service and I don't think it's insurmountable to get back to a brand position that we had before.
Great. Thank you.
Thank you and that will conclude today's question and answer session I would like to hand back to fallen Nair for any additional or closing remarks.
Well, let me end by saying that it's one we feel really good about this year.
And we realize the talents in Chile.
And but we're not afraid of it and and we're gonna taken on trade on and.
And if I look at the rest of of our business I feel really optimistic about the rest of the business and even more optimistic about the combination of mobile and fixed and Costa Rica.
It is going to be a very good year and and I do think of all of you for your support.
Yeah.
Ladies and gentlemen, this concludes Liberty Latin America's first quarter 2021 investor call.
As a reminder, a replay of the call will be available and the Investor Relations section of Liberty Latin America's website at Www Dot L L and dot com.
There you can also find a copy of today's presentation.