Q2 2025 Liberty Latin America Ltd Earnings Call
Speaker #1: 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 Sumit Dutta , VP of Investor Relations for Liberty Latin America .
Speaker #2: Good morning and welcome to Liberty Latin America second quarter 2025 Investor Call . At this time , all participants are in listen only mode .
Speaker #2: Today's formal presentation materials can be found under the Investor Relations section of Liberty Latin America's website at . Following today's presentation , instructions will be given for a question and answer session .
Speaker #2: As a reminder , this call is being recorded . Today's remarks may include forward looking statements , including the company's expectations with respect to its outlook and future growth prospects , and other information and statements that are not historical fact .
Speaker #2: Actual results may differ materially from those expressed or implied by these statements . For more information , please refer to the risk factors discussed in Liberty Latin Americas most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-q , along with the Associated Press release .
Speaker #2: Liberty Latin America disclaims any obligation to update any forward looking statements or information to reflect any change in its expectations , or in the conditions on which any such statement or information is based .
Speaker #2: 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 , which is accessible under the investor section of our website .
Speaker #2: I would now like to turn the call over to our CEO , Mr. Balan Nair . Thank you , Sumit , and .
Speaker #3: Welcome everybody to Liberty Latin America's second quarter and first half 2025 results presentation . I'll begin with our group highlights and an overview of our operating results by Credit Silo .
Speaker #3: Christopher Noyes . Our CFO will then follow with a review of the company's financial performance . After that , we will get straight to your questions .
Speaker #3: As always , I'm joined by my talented executive team from across our operations , and I will invite them to contribute as needed during the Q&A .
Speaker #3: Following our prepared remarks , that's a point of housekeeping . We will both be working from slides , which you can find on our website at .
Speaker #3: Starting on slide four in our highlights today , we believe our share price does not fully reflect the intrinsic value of our underlying business .
Speaker #3: The unlock this value for our shareholders . We plan to proceed with the separation of Liberty Puerto Rico from LA . It is essential that Liberty Puerto Rico is positioned with a strong and sustainable capital structure .
Speaker #3: Post separation . To that end , we are actively working towards this goal through a targeted liability management exercise . Chris will provide more details on this in his section .
Speaker #3: We also continue to grow our high speed broadband and postpaid mobile base in the first half , adding 70,000 subscribers in total across the group .
Speaker #3: This was over 100,000 additions excluding Puerto Rico , with the main contributor being Costa Rica , Panama and Jamaica . We reported 2.2 billion of revenue in the first half of 2025 .
Speaker #3: In the same period , residential revenue was up 2% in Liberty , Caribbean and Costa Rica and 8% in CN Panama . Year over year , on a rebased basis , we expect these businesses to continue their momentum in the second half following the launch of new customer value propositions , which should resonate well in our markets .
Speaker #3: In addition , and after less favorable phasing through H1 , we anticipate better momentum on B2B second half across a number of regions .
Speaker #3: We posted adjusted EBITDA of $822 million , reflecting a rebased year over year growth rate of 8% in the first half . This includes double digit rebased growth in Liberty , Caribbean , Panama and Puerto Rico .
Speaker #3: We maintain our focus on lowering capital intensity . These efforts led to a 23% expansion in adjusted EBITDA , less T&E additions year over year , bringing us to a margin of 25% of revenue in the first half of the group and 29% excluding Puerto Rico .
Speaker #3: These are strong numbers , reflecting the focus of management on profitable growth , which is expected to drive strong cash conversion in the second half .
Speaker #3: Turning to slide six . I'll begin our operating review with our cable and wireless credit silo , which had another very solid quarter .
Speaker #3: This silo includes Liberty Caribbean Panama , and our Liberty Networks segment . Starting with our Caribbean operations now named Liberty Caribbean , we rebranded this segment in the revenue in the quarter with a refreshed identity and signaling a renewed focus on driving digital transformation , particularly in the B2B space .
Speaker #3: On the left of the slide , we present our mobile KPIs . Postpaid mobile ads remain strong , led by another solid quarter in Jamaica that represents 20 consecutive quarters of subscriber growth .
Speaker #3: Mobile app reported growth both sequentially and year over year , supported by prepaid price increases implemented earlier this year and in the first half of last year .
Speaker #3: This resulted in 6% mobile base revenue growth in Q2 year over year . Moving to the center of the slide to our fixed KPIs , broadband subscriber growth was flat in Q2 , with gains in Jamaica offset by declines , mainly in Trinidad .
Speaker #3: Trinidad's the only Caribbean market we operate in where there are three national fixed players and where we lack a mobile offering . Fixed Rpu per customer relationship increased both on a sequential and year over year basis , reflecting the benefit of pricing changes .
Speaker #3: Lastly , for Liberty Caribbean , besides our corporate rebranding , we launched a new residential campaign titled Let Your Rhythm Flow . This initiative strengthens our convergence strategy with a particular emphasis on accelerating postpaid mobile adoption .
Speaker #3: The redesigned platform introduced a striking new visual identity that is both distinctive and deeply rooted in local cultures , traditions , and values , enabling us to build a stronger emotional connection with our customers .
Speaker #3: Moving to slide seven and our CN Panama segment . Starting on the left of the slide , we delivered another quarter of strong postpaid adds , which supported robust mobile rebased revenue growth of 6% year over year .
Speaker #3: This performance continues to reflect the positive subscriber momentum we built following a competitor's exit from the market last year . Mobile remained stable both sequentially and year over year , impacted by lower prepaid recharges during the quarter , largely due to nationwide protests which have since subsided .
Speaker #3: Moving to the center of the slide , we delivered a solid quarter of internet subscriber adds . This growth reflects the effectiveness of our broadband strategy and demand for high speed connectivity .
Speaker #3: On the other hand , fixed output continued declined both sequentially and year over year . This was primarily driven by retention discounts and lower acquisition rpu as we offers from competitors .
Speaker #3: Our go to market strategy remains focused on delivering consistent results across our high speed networks . This commitment was recently recognized by Ampere , which named us the best performing fixed network in the country in the B2B space .
Turning your slide there and Liberty, Costa Rica.
Starting on the left of the slide.
Mobile continues to perform strongly with growth concentrated in the high value postpaid. Segment reinforcing, our leadership in the market and driving 5%, rebates Revenue growth year-over-year,
According to the latest regulator report, we Remain the number 1 mobile. Operator overall in Costa Rica throughout 2024,
In postpaid specifically regain 2 percentage points in market share year-over-year.
as flat sequentially but through year-over-year supported by postpaid, price increases and a higher proportion of postpaid subscribers
Moving to the center of the slide, we delivered modest broadband net additions and fixed our decline for sequential and year-over-year.
As reference in previous calls, the competitive backdrop in Costa, Rica's fixed Market remained challenging.
To defend our fixed position.
And differentiate our offering. We've also revamped our video proposition
Since July 15th, new and existing customers have access to the most popular over-the-top platforms included in their home plan.
This bowl and meaningful value proposition unique for the Costa. Rican Market is anchored by a new brand claim you want it. You got it.
it's a promise that brings us closer to our customers showing that we listen, we care and we deliver
Moving to slide 12 and our third credit side of Liberty Puerto Rico.
Starting on the left of the slide.
Mobile performance showed signs of improvement.
For Speed, losses were lower compared to q1 with a better run rate in May and June and mobile R for increased sequentially. Resulting in relatively flat sequential mobile, subscription Revenue,
We continue to be focused on the mobile segment, and I'm pleased to report that in June, we successfully expanded our Network, through the integration of low band, 600 MHz Spectrum, alongside AWS 3, and AWS 4 bands.
This combination of spectrum bands is instrumental in meeting the surging demand for mobile data.
Ensuring, we remain, well, positioned to support future growth.
As a reminder, we will honor with both the best-in-class, and the most reliable Network awards from gws earlier this year.
Further validating the strength and consistency of our Network performance.
Moving to the fixed site in the center of the slide following the price increase implemented earlier this year, we reported 7,000 in net, subscriber, net losses.
Fix our to increase, both sequentially and year-over-year.
As our food growth was more than offset by a lower subscriber base impacted by the discontinuation of the ACP program in Q2, 20224.
We are now close to 20% 500 in the home and have invested to upgrade our hfc Network to Doc's, 3.1.
This enhancement has significantly boosted performance and enabled us to win the Fastest Fixed Network award from UCLA, achieving the highest speed scores and Wi-Fi performance on the island.
Slide 30 provides a deeper. Look into postpaid. Net adds, the evolution of mobile NPS.
The launch of a new postpaid, CVP Liberty, mix and other initiatives.
On the left of the slide, we break down postpaid activity into gross ads and disconnections.
gross ads over the past 2 quarters have remained consistently pre-migration levels underscoring, the resilience and appeal of our product offering
Postpaid chain continues to improve marketing, the fourth consecutive quarter of positive momentum.
Moving to the center of the slide. We show NPS progression, the key leading indicator of customer satisfaction and brand perception.
Compared to 1 year ago, we've made significant strides in rebuilding customer trust with NPS showing strong recovery.
While our mobile NPS have returned to positive territory. It remains below, pre-migration levels, indicating further room for improvement.
On the top right of the slide, we wanted to share more detail on Liberty, mix.
In July, we launched our new post big customer value, proposition Liberty, mix.
This Innovative Mobile plan office, 3 tiers, enabling customers to tailor each line to the specific needs of individuals family or group members within a multi-line bundle.
Liberty, mix markets, the first step in our brand, relaunch strategy, and we anticipate, it will drive growth ads in the second half of the year.
On the bottom right of the slide.
Now that we have strengthened our Network, it systems and internal processes via applying the same Playbook use across the Liberty Latin America group where FMC has proven very successful with over 30% penetration in a number of markets to lean into convergence in Puerto Rico.
A combination of best-in-class fixed and wireless infrastructure should allow us to differentiate in a competitive marketplace.
Being part of the wider Group Liberty, Puerto Rico benefited from shared platforms and expertise.
We've been developing solutions that use AI to improve our operations across our entire value chain with strong, focus, and Commercial activities, and Topline growth.
Specifically in Puerto Rico, we have been focusing on billing quality assurance, and insurance prediction.
Moreover, we've made a significant number of changes to the management team, including leveraging experience and expertise from across the lla footprint.
Lastly, we continue to reshape the company's cost base to reflect the smaller scale of the business, conducting a discipline review of each cost line.
We expect additional measures will deliver greater margin impact in the second half of the year.
Finally on slide 14, we summarize our strategic vision and outline the key drivers that sets us up for growth initiative.
Firstly.
The residential space where we are. Well, positioned, we operate in countries with healthy markets structures, across both fixed and mobile services and we pursue consolidation opportunities to deliver value to customers and markets. For example, last year we had agreed to acquire tigo's business, and Costa Rica, which is Sport growth in that market.
We are working with Regulators to approve that transaction and now expect this to close in early 2026.
30% in several markets, supported by our robust fixed and mobile infrastructure.
We have also introduced several new customer value propositions in recent weeks reinforcing. Our commercial momentum heading into the second half. Our second area of focus is B2B which accounts for nearly 1/3 of group Revenue.
While we Face year-over-year, b2g Revenue, headwinds through Q2. And first half, particularly in Panama, we expect improved performance in the second half of across several geographies to drive improving Revenue, momentum.
Governments are investing in digitization, security, and cloud computing. And we are the right trusted partner for them.
Along those lines, ICT continues to be a source of future growth opportunity, as we develop more encompassing cloud and cyber Security Solutions. Focus on Mission critical operations for our customers.
The Manta bill, which progressed steadily through the first half, is expected to contribute meaningfully to Liberty Networks' revenue and adjusted EBITDA over the medium term.
lastly cost, we have delivered strong margin progression in recent quarters especially within our cnw silo
across the group, we continue to see upside as we focus on higher margin residential products,
Our initiatives are our copper migration digitization and AI adoption have significantly, enhanced Workforce efficiency, leading to meaningful labor cost. Reductions
Additionally, we anticipate healthy synergies for following the expected completion of the Tigo merger in Costa Rica.
With that I'll pass you over to Chris Noyes. Our Chief Financial Officer who will take you through our financial performance before we move on to your questions.
Chris.
Thanks. Bye.
Let me now take you through our financial performance in Greater detail. Starting on slide 16.
Q2 2025 revenue was 3% lower on a rebate basis, totaling $1.1 billion.
This decline was primarily driven by the phasing of project related, B2B revenue. And cross several geographies. Importantly, we have good visibility into stronger delivery in the second half of the year.
However, residential Revenue grew 1% year-over-year on a. Rebates basis reflecting the strength of our core consumer business.
Turning to adjusted OEA, we reported a rebased increase of 7% to $415 million, building on the solid 8% growth in Q1. Among our segments, only Liberty Network saw a year-over-year decline in adjusted OEA, largely due to the timing of non-cash RAO acceleration, which has now largely normalized.
Supporting this growth is operating leverage as we continue to execute on a range of costs out initiatives across our operations. These efforts have contributed to an improvement in our Consolidated, adjusted OA margin, which expanded by 340 basis points year-over-year. Moving to the last section. We highlight an important metric for us which is adjusted oea. Less PS, This increase by 26% to 265 million in Q2 representing 24% of Revenue compared to 19% last year.
The year-over-year Improvement is reflective of the higher adjusted OA margin and lower Capital intensity, with P&E editions amounting to 14% of Revenue in the quarter.
Although we were up year-over-year on adjusted Oya less Piney editions, our reported adjusted FCF. Before partner distributions was -41 million in Q2 as compared to -7 million in the prior year, a decline of 34 million
This was attributable to working capital swings, including timing on key collections from our government customers. As in previous years, we anticipate a robust second half in cash flow generation, principally in the fourth quarter.
Slide 17 recap our Q2 results for the cnw credit Silo, which consists of Liberty, Caribbean, cwp, and Liberty networks, starting with Liberty Caribbean in Q2, we reported 366 million in Revenue with flat rebates. Growth year-over-year, this result reflects 6% growth in residential mobile offset by a rebase decline of 3% and 1% year-over-year in B2B and residential fixed respectively.
Helped in part by selected price increases in a larger post-paid subscriber base supported by our successful FMC, and prepaid to postpaid, migration strategy, fixed residential Revenue declined, driven by lower volumes, mainly due to the impact of hurricane Barrel in Q3 2024 and lower non-subscription Revenue.
B2B was impacted by lower project Revenue, particularly in Bahamas.
Adjusted oaoc came in at 174 million representing, 11%, rebates, growth year-over-year fueled by optimization initiatives across our Island geographies and our operating cost care categories, including our Network and Commercial expenses.
Our efforts have translated into an adjusted OA. Margin Improvement of nearly 500 basis points year-over-year, reaching 47%.
Next moving the cable wireless Panama cwp generated 177 million of Revenue and 69 million of adjusted OA with a 10% rebase Revenue, Decline and 6%. Rebase adjusted oea, dog, growth year-over-year. The rebase Topline decline was driven by 30%, lower B2B Revenue. Partly offset by increases of 6%, and 2% in residential mobile and residential fixed respectively.
The year-over-year decline in B2B Revenue reflects an exceptionally strong prior year comparison, driven by high volume of government project wins in. Q2 2024, we expect a catch up in the second half of the Year supported by a solid pipeline.
The healthy mobile revenue uplift was supported by postpaid subscriber growth and higher handset sales. However, prepaid was partially impacted by nationwide protests during the quarter.
The residential fixed Revenue. Rebates growth was mainly driven by Broadband rgu Edition.
Year-over-year. Adjusted oea performance was driven by improved, gross margin. Helped in part by lower B2B, project related revenue, and a reduction in operating expenses year-over-year as a result. These factors led to an adjusted OA margin expansion of almost 600 basis points to 39%,
Turning to Liberty networks, which delivered 115 million dollars in revenue and 61 million in the just OA. Resulting in a rebase decline of 3% in both metrics. Specifically, wholesale Revenue, fell by 3% on a rebase basis, due to an 8 million dollar reduction in non-cash IU Revenue amortization as compared to the prior year.
Enterprise Revenue declined by 1% on a rebase basis, mainly due to lower project related Revenue, which more than offset gains in it as a service and connectivity.
Adjusted OA was mainly impacted by the aforementioned decrease in iru Revenue.
Aggregating. All 3 operating segments within the cnw credit Silo, we generated 636 million in Revenue, reflecting a 3%. Rebase Decline and 333 million in the adjusted. OA. Resulting in 7% rebase growth.
Moving to slide 18 and the Q2 results for our other 2. Credit silos Liberty, Puerto, Rico and Liberty Costa Rica on the left Liberty Puerto Rico Revenue was 301 million representing a 5% year-over-year, rebase decline residential 6 Revenue declined, 1% primarily due to lower volumes following the discontinuation of the ACP program partially offset by higher broadband and video arpu driven by price increases implemented earlier this year.
Mobile residential Revenue declined, by 3% on a rebase basis driven by lower post-paid subscriber. Base Post migration, this is partially mitigated by higher nonsense, subscription Revenue, while prepaid Revenue, remained, broadly flat,
B2B revenue declined 18% on a rebase basis, mainly due to lower mobile service revenue resulting from a reduced subscriber base and RPU decline.
adjusted OAA increased by 21% year-over-year on a rebase basis, reaching 87 million
The Improvement was primarily driven by lower bad debt expense to phase out of integration and TSA costs and reduced labor costs.
PNE editions. Were 38 million representing, 12% of Revenue. The 340 basis point D3, silver prior year levels as the business actively managed its capital intensity.
Flat rate based adjusted, Oya, dog, growth year-over-year, mobile residential Revenue, grew 5% on a rebase basis supported by higher post-paid volumes from our prepaid to postpaid migration strategy and strong equipment sales.
Fixed Revenue was down, 3% year-over-year on a rebase basis driven. By lower rpu, primarily due to our buy to own CPE model which is in turn, increasing non-subscription Revenue.
B2B Revenue was down 5% year-over-year on a rebase basis, mainly due to lower Service rates.
Adjusted orbita, remained flat as Revenue, gains were offset by higher equipment, costs and increased bad debt.
Next to slide 19 and our balance sheet metrics by credit Silo and an aggregate for La as of June, 3 0.
The cnw Silo accounts for approximately 5 billion dollars of LA's. Total debt of 8.2 billion and has Covenant leverage of 3.9 times given the refinancing we have completed over the last 9 or so months we have Linked In the silos average life to about 6 years.
Turning the cost to Rica. We have about 500 million dollars of debt and the business has Covenant leverage of 2.1 times with the debt stack due in 2031.
Importantly we would expect to be in position post-closing the to acquisition in 2026 to refinance. Our debt to more attractive levels, given the low leverage and underlying strong performance of the business.
And finally, Liberty Puerto Rico has 2.8 billion dollars of debt. Covenant leverage at 7.9 times and debt maturities. Largely between 2027 to 2029.
We will discuss our approach with the near dated stack on the next slide.
At the Consolidated level, we have no debt at the holding company and dust in aggregating. Our 3 credit silos our 8.2 billion dollars of debt reflects Consolidated net leverage at 4.7 times.
Moving the slide 20. Today we wanted to highlight 2 key strategic initiatives that we have recently embarked upon at La and its operating businesses.
Liability management at LPR and a concerted effort at La to unlock the underlying values of our operating assets.
First turning to the left side of the slide and building upon the balance sheet, discussion from the prior slide, and the commentary that we have shared over the last year. Our local operating team in lla. More broadly have been highly focused on stabilizing LPR and improving all aspects of the underlying business as balance noted today, we are seeing green shoots of a recovery.
With that being said, it is our view that the capital structure at LPR is unsustainable. Both in terms of quantum of Leverage and expected carry cost.
Hence with still more than 2 years until our earliest Bond maturity, we believe it is the appropriate time to look to improve and rightsize the capital structure. This should set opr up for long-term success.
Importantly, LPR has Covenant flexibility in its credit documents, which will enable LPR to utilize its assets, to raise incremental Capital to the extent needed to fulfill near-term, liquidity gaps.
For our team on the ground, it remains business as usual, with the utmost focus on our employees, customers and vendors and ultimately growing the business. There is no specific timeline for resolving the capital structure. We'll look to communicate updates as necessary.
Finally, LPR has appointed moelis and ropes and grey to lead the execution of the liability management exercise.
Moving to the right side of the slide, having previously reiterated. The Silo principle of the Liberty Latin America group and in order to better highlight and unlock the respective value in our assets, we are announcing Our intention to separate Puerto Rico from the rest of the lla group.
This will enhance our ability to better position each of the respective businesses and their positive attributes including Market position growth opportunity and potential cash flow generation.
The separation can be affected in several ways including a potential spin-off of LPR and we are targeting complete into the first half. 2026 importantly, the separation is not dependent on completing the liability management exercise.
In terms of the relative size of the 2 groups of assets and using 2024 full year results, as a proxy revenue and adjusted oea for Loa, excluding Puerto Rico, would have been approximately 3.2 billion dollars and 1.3 billion respectively.
1.3 billion of Revenue and 308 million of, just the way to
On this same basis and excluding Liberty Puerto Rico, llas adjusted FCF before distributions would have been nearly 200 million or almost 70% higher than what was reported. As a Consolidated group in 2024, this is not necessarily reflective of the separate results, but a good indication.
We obviously expect FCF to expand from here given the underlying operational strength of the business as we have demonstrated through H1.
Additionally, the remaining L business would be levered roughly 1 turn lower from where it is today.
Post separation lla expects to have the ability to enhance its capital return strategy, including the potential for not only share repurchases, but recurring dividends capitalizing on the FCF generation of the lla assets. Excluding Liberty, Puerto Rico.
City and lion tree are working with lla on asset separation, as well as other corporate options to help to unlock Equity value at lla, and remove the embedded valuation discount that we believe has been apparent in our Equity trading price.
Moving to slide 21 in our conclusions in the first half, we delivered solid results, adjusted oea grew and a high single digit rate with particularly strong growth in The cnw Silo. We also saw a year-over-year decline in PE editions. This is a reflection of our discipline Capital intensity management and improved operational efficiency. Looking ahead to the second half we are optimistic, we have launched new customer value, propositions aimed at sustaining residential. Momentum on the B2B side, we have a good pipeline that should support stronger Revenue performance. In addition to these Topline drivers, we have substantial cost out initiatives and flight across each of our businesses and corporate and expect more favorable working capital Trends in H2.
All of which should set the stage for improved free cash flow performance, as we close the year.
Our operating prospects combined with the actions that we just discussed on both the liability management. And separation of Puerto Rico, We Believe set the stage for Value creation for lla. Shareholders. We look forward to updating investors over the next quarters as our projects advance and both the operating and corporate teams of Loba are hard at work to deliver continued growth margin, Improvement and cash flow generation.
With that, operator happy to take uh questions.
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The first question comes from Vito to meter of Goldman Sachs, your line is now open. Please go ahead.
Good morning all and thanks for taking our questions. We have 2 from our side, they're actually on Panama. The first 1 is if you could give a bit more caller, on the B2B headlines that you saw there. If those are related to private or government projects and if there have been any further, call actions issues on this B2B front. And the second question would also be on Panama, but on the margin side, margins, improved a lot improved a lot there. And to a point that I Rose year on year, despite the revenue I had with, could you give more caller on the Opex reductions or efficiencies that allowed for that, aside from revenue mixed effects naturally? Thank you.
You'll see the real margin expansion at the operating free cash, flow level, and the, and, and the way we've done that is through both efficiencies at the uh, Opex level and efficiencies at the capex level. I mean the uh we we we see a significant, uh, I think from the last time it's like almost 6 7 points. And and uh, and we think there's still plenty of room to grow. As you look at some of our other operating units as well. So we're quite bullish around the margin expansion and Panama. Um, the cash, the revenue trajectory will change in the third quarter, as the phasing issues of B2B, but I would like to highlight our mobile business that have been growing. Revenue has been growing and a fixed business grew as well and the fixed business. Uh, you know, has I think even more
Uh, opportunity for us because we do have the smaller market share in that market, with a better Network, the 5 digit to the home network. So with that, um, yeah Rocio, would you like to add some color?
Sure. Absolutely. So on the revenue side uh for B2B in the headwinds that we were experiencing this quarter, I would say or a bit be business is uh tale of 2 cities. So 1, the recurring business and the other side and non-recurring business which is mostly government. Um, Revenue. So on the recurring business, we are, uh, experiencing quite a strong quarter. In fact uh, just
To give you a bit of comfort. We are seeing our customer base in both in Mobile and in fixed Services. Growing, um, middle to high single digits. So we're seeing the the recurring business, uh, progress and continue to progress very well with momentum.
um, on
on non-recurring business, which is this type of big projects,
uh, government projects. Uh, of course it's basically depending on the facing. Uh, so, uh, you have 1, big project. Like we want this quarter of the meduka project, right? That was like 40 dollars, however, until you are able to see it and your pnl, it takes time and those, uh, this lumpiness of the nonrecurring businesses. Basically, what you are seeing right now and as um, balance and increases stated is something that we are, uh, hoping to see with a very different momentum on the second half of, of the year. So, so that's your your point on on revenue on the, uh, increased profitability. I think it's basically um, 2 main levels, uh, at the gross margin level. Uh, it's basically the the Tailwind from our well, performing recurring business, uh, the residential business and the recurring part of the B2B business and then, uh, at the Opex level, uh, we have done,
Significant to work over the last quarter, in terms of streamlining, our labor and our non-labor Opex and uh you're starting to see the fruits of that work.
So let's see, noticed. Thank you.
Thanks very much.
The next question comes from Chris Hall of New Street research. Chris, your line is now open. Please go ahead.
Yep, thank you. I I just had a couple of questions on the um, plans around spinning out, Puerto Rico. Obviously, you've mentioned, you know, that you want to use selected assets. I just want to wondered if you could clarify which Assets in particular, I mean the key ones from my perspective would seem to be spectrum and the Broadband network. But is there anything else that you think is material enough to be able to utilize?
Well, are you kind of highlighted a lot? There should be the assets that we have, but we're really not commenting too much around. You know how, uh, and we're going to approach that liability management the management our our team right now. We, we just focus on running the business, improving the operational metrics. And, uh, but we as you highlighted, we do have, uh, um, some strong assets within the, uh, group that, uh,
That uh, gets a financial flexibility. Thanks.
Okay, great. And then just to sort of follow up then, as you also mentioned,
Once Puerto Rico is separated, you know, the rest of the group leverages significantly lower.
Share buyback. I mean it it would there be a further need for de-levering of the rest of the group or you think at that point.
Uh, you know, you have flexibility essentially around all of the cash flow to use it either for, um, you know, shoulder remuneration, or or m&a if you if, if there was something.
Uh, interesting from that perspective.
I here's how I would say, if you look at the, the, the separated asset from what remains, just look at the initial growth on that and we will organically de-lever that that is kind of, you know, 1 point and it's Chris highlighted. The the actual free cash flow generation of the remaining code. Especially if you look at our wholesale business of sub Tree Business, we're throwing up.
Quite good cash.
Now, certainly dividend stock BuyBacks and a number of things. The the, the traditional Capital allocation strategy, we would, you know, we we would we would go through it but uh, we actually really excited about the cash flow generation of the business. We think the the the debt will organically de-lever as we expand our ibida and all the operational efficiencies that we've been working on kicks in. Um, so from that sense, uh, I I think with, you know, it's sitting pretty good. So you're going to have a lower level of balance sheet, good cash flow generation and a lot of optionality for, uh, for management and the board to consider. And I, and I would add. Yep.
That the capital structure on cable and wireless and Costa Rica is long-term in nature. So over you know, 30 80% of the debt is, you know, 2031 or Beyond so that provides a huge amount of flexibility.
Yep.
Thank you.
As a reminder to ask a question. Please press star. Followed by 1 on your telephone keypad now.
The next question comes from Gabrielle. Vasel Lima from Morgan Stanley, your line is now open. Please go ahead.
Hey, thanks for taking my question. Um could you give me a bit more Colour on the impairment you had on on 430 Rico?
Uh, that would be in my thank you.
Sure. The, the, the, the the impairment is really around the, uh, spectrum that we have here in Puerto Rico, and we had a third party assessment on that. This is the spectrum that came to us from the AT&T acquisition. And, um, and, you know, if you know, we we recently acquired new Spectrum from Dish, uh, which required, uh, you know, uh, a valuation Peg on the spectrum that we already own. It's uh, it's an accounting, uh, adjustment. Yeah. Uh, Brian you want to add to that? No, that's right. Um, the the Spectrum was compared, you know, from the AT&T acquisition, which had
A relatively higher carrying value than the this spectrum. So that ultimately resulted in the, in the loss.
Thank you. Thank you. Thank you.
That will conclude today's question and answer session. I'd like to hand back to Bellona for any apologies. We do have another question from David Lopez of New Street research. Your line is now open. Please go ahead.
Hi. Thank you for taking my question. Just a couple more on property call. I think you mentioned a change in management team there. I was wondering if you could give a bit more color and on your new offers mix and match, I know it's solid. But what's the initial impression and initial attraction um, blue customer like it or or what are the initial thoughts, please. Thank you.
sure, you know, um,
There are a number of things we were looking at here, Puerto Rico and the management changes really focused around 3, specific areas 1, our operations and processes. And this is everything from how you sell do how you collect
To how you manage the back office.
Second, we will really focus on our Network and technology and that was another big management change that we made. So that the networking technology, you know, improvements that we were looking for uh get manufactured this year, if you saw, we fired up new Spectrum, we improved the fixed Network and made significant improvements on our it systems as well.
Uh clearly as you can say was underwhelming. And uh so we brought in some really strong talent in that area and you, you know, you can see it manifested really in the last few weeks with our first launched under this new management team and it's catching, uh, our crus have actually increased. The MRC is increased over the, you know, on incoming over the base.
And the proposition is catching, we've got more traffic into stores. Etc. So, the culmination of all 3, uh, resulted in better NPS lower chain and soon in the second half this year, you'll start seeing, um, you know, the, the
The the drop in the top line as well. Uh, that that is kind of like how we've been thinking about it. Um, this is a project that's going to take a lot longer than than, uh, than it took to, uh, to get to where we were at. And um, and but we are very focused on it and I think we have the right team here in Puerto Rico to execute on it.
David, thank you.
That will conclude today's question and answer session. I'd like to hand back to ban there for any additional or closing remarks.
Thank you, operator. And thank you, everybody. In the call. We are, we are actually quite excited about the future here. The future in Puerto Rico, and the future and the rest of our businesses.
Puerto Rico, things are turning green, trees are appearing and as Chris indicated. You know, the capital structure is just not optimal for the business right now. So we're going to work on that and this is going to be a really good business, um, for lla and future lla shareholders.
And then on the remaining business,
you can see the numbers. We are very, very excited about it. The cash flow generation as well as the organic growth that we are going to see. Um, it's it's it's, it's going to be really clear to all of you to our investors as well where you can now have a clear line of sight to both these businesses.
And uh Chris John Ray my whole management team, we are very excited about the future here and uh and that some of the changes we're making. So thank you for your support and look forward to talking to you again.
ladies and gentlemen this concludes Liberty Latin America's second quarter 2025 investor call,
As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Latin America's website at www.lacomm.com. There, you can also find a copy of today's presentation materials.