Liberty Latin America Reports Q2 & H1 2022 Results

Q2 reported revenue growth of 4% to $1.2 billion, up 1% on a rebased basis

Record second quarter mobile postpaid additions of 106,000

Acquisition of Claro Panama completed on July 1

Nearly $120 million of shares repurchased in H1

Liberty Latin America Ltd. ("Liberty Latin America" or "LLA") (NASDAQ:LILA, OTC Link: LILAB))) today announced its financial and operating results for the three months ("Q2") and six months ("YTD" or "H1 2022") ended June 30, 2022.

CEO Balan Nair commented, "Following a solid start to the year, we made further progress in the second quarter as we grew our internet and postpaid mobile subscriber bases and completed the acquisition of Claro Panama in the beginning of July."

"We continue to focus on delivering subscriber growth across products and customer segments that generate recurring revenue. During the quarter we grew our broadband subscriber base, including a record number of additions in Costa Rica and a return to growth in C&W Caribbean & Networks, while our operations in Chile broadly maintained market share despite intense competition. Mobile postpaid additions were greater than 100,000 for a second consecutive quarter as our ongoing commercial focus led to subscriber growth across all of our reporting segments."

"Our inorganic strategy is progressing well and is set to deliver significant value for stakeholders as we integrate operations and realize synergies. On July 1, we closed the acquisition of Claro Panama and we expect to complete our agreed 50/50 JV with Claro Chile in the second half of 2022. Our integration plans in Puerto Rico and Costa Rica are on-track and we are excited to build growth-oriented converged telecommunications service providers in those markets."

"We are also committed to responsible and sustainable practices across our operations and through our recently released 2021 ESG Report, we demonstrated significant progress in measuring and highlighting new goals with respect to our energy consumption, data privacy and security efforts, and strengthening our commitment to positive change."

"Overall, we continue to build operating momentum in our business, while also making progress with our inorganic strategy, which we expect to drive additional Adjusted FCF growth in the coming years. We have continued to be aggressive with our share buyback activity, purchasing a record amount in the second quarter and taking our year-to-date total to nearly $120 million, as we remain confident in our business and prospects."

Business Highlights

• C&W Caribbean & Networks: solid operating and financial performance
  • Mobile postpaid momentum continued with record quarterly additions in Q2
  • Reported and rebased Adj. OIBDA growth in Q2 of 11% and 12%, respectively

• C&W Panama: fixed and mobile postpaid subscriber growth
  • 79,000 fixed RGU and 86,000 mobile postpaid adds over past twelve months
  • Reported revenue 6% higher as compared to prior-year period

• Liberty Puerto Rico: consistent subscriber additions; focus on integration
  • Continued fixed RGU growth, postpaid driving mobile additions
  • Integration and synergy realization on-track

• VTR: market remains highly competitive; financial performance impacted by price reductions
  • Operational service level improvements more than offset by market challenges
  • Continue to expect completion of JV with América Móvil in H2

• Liberty Costa Rica: robust operating and financial performance
  • Record broadband RGU additions of 11,000; postpaid base up by 30,000
  • Reported and rebased revenue growth of 198% and 10%, respectively

LLA 2022 Financial Guidance - Update

We remain on-track to deliver financial guidance targets for P&E additions as a percentage of revenue (18%) and Adjusted FCF ($250 million) as presented in our Q4 2021 earnings materials, which was based on the operating footprint we had at the start of the year (i.e. excluding pending acquisitions).

Following the acquisition of Claro Panama on July 1, we are now able to update our financial guidance to incorporate the impact of integrating this business on our group expectations for the year as follows:

• P&E additions as a percentage of revenue at ~18%
• Adjusted FCF guidance of ~$220 million
  • Claro Panama acquisition expected to reduce LLA Adjusted FCF by ~$30 million in 2022

Additional information, including historic quarterly revenue, adjusted OIBDA, and P&E additions, can be found on our website at https://www.lla.com/investors.

Financial and Operating Highlights

N.M. – Not Meaningful.

Revenue Highlights

The following table presents (i) revenue of each of our segments and corporate operations for the periods indicated and (ii) the percentage change from period-to-period on both a reported and rebased basis:

N.M. – Not Meaningful.

• Our reported revenue grew by 4% for each of the three and six months ended June 30, 2022.
  • Reported revenue growth in Q2 and H1 2022 was driven by (1) the addition of $74 million and $146 million, respectively, from the acquisition of Telefónica's Costa Rica operations on August 9, 2021, (2) organic growth in C&W Caribbean & Networks, (3) organic declines at VTR and (4) a net foreign exchange ("FX") impact of $(34) million and $(63) million, respectively. The FX impact was driven by an average 18% and 15% depreciation of the Chilean peso for Q2 and H1, respectively.

Q2 2022 Revenue Growth – Segment Highlights

• C&W Caribbean & Networks: revenue grew by 5% on a reported basis and 6% on a rebased basis.
  • Fixed residential revenue was 1% higher on a reported and rebased basis, as compared to the prior-year period. Our year-over-year performance was driven by internet subscriber growth over the past twelve months. In the second quarter, Jamaica returned to internet RGU growth as our commercial focus and new FMC propositions drove additions.
  • Mobile revenue was 3% higher on a reported basis and 4% on a rebased basis, as compared to the prior-year period. Growth was primarily driven by a higher average number of mobile subscribers, resulting from sales initiatives, including converged offerings.
  • B2B revenue was 8% and 9% higher on a reported and rebased basis, respectively, as compared to the prior-year period. Performance was driven by growth in fixed internet and mobile subscription services and, for subsea revenue, the positive impact from IRU accelerations in Q2 2022.
• C&W Panama: revenue grew 6% on a reported and rebased basis.
  • Fixed residential revenue was up 10% on a reported basis and rebased basis, as compared to the prior-year period. Growth was driven by subscriber additions over the past twelve months, resulting from investments in our networks, products and commercial activities.
  • Mobile revenue decreased by 2% on a reported and rebased basis. The decline was driven by reduced ARPU from prepaid services, mainly attributable to lower recharging activity. This was partly offset by continued strength in our postpaid segment, where revenue grew by 39%, driven by the addition of 86,000 subscribers over the past twelve months, mainly through successfully migrating customers from prepaid to postpaid.
  • B2B revenue grew by 13% on a reported and rebased basis. The year-over-year increase was driven by the successful award of certain infrastructure projects, growth in fixed recurring revenue and higher mobile handset sales.
• Liberty Puerto Rico: revenue grew by 1% and was flat on a reported and rebased basis, respectively. Fixed residential and B2B growth was offset by lower mobile revenue year-over-year. Robust fixed residential growth was driven by consistent subscriber additions over the past twelve months, which more than offset the negative impact of $2 million in customer credits during Q2 2022 related to a significant power outage. Higher B2B revenue was driven by postpaid mobile subscriber additions, mainly related to a Government sponsored program, while reduced consumer mobile revenue was due to a decline in prepaid subscribers and ARPU.
• VTR: revenue was 28% and 16% lower on a reported and rebased basis, respectively. The year-over-year revenue decline was primarily driven by residential fixed revenue performance. Over the past twelve months, intense competitive pressures have led to a reduction in ARPU and subscriber numbers. In addition, strategic initiatives implemented during the first half of 2022 have led to lower ARPU levels across our internet subscriber base.
• Liberty Costa Rica: revenue grew by 198% and 10% on a reported and rebased basis, respectively. Reported performance benefited from the inclusion of Telefónica's Costa Rica operations in the quarter. Rebased growth was driven by strong subscriber additions across both our mobile and fixed businesses, where we added 275,000 and 63,000 subscribers, respectively, over the past twelve months.

Operating Income (Loss)

• Operating income (loss) was $(350) million and $173 million for the three months ended June 30, 2022 and 2021, respectively, and $(162) million and $354 million for the six months ended June 30, 2022 and 2021, respectively.
  • The declines during the 2022 periods are primarily due to goodwill impairments incurred during the second quarter of 2022, which were partially offset by decreases in depreciation and amortization expense as we ceased recording depreciation expense for the Chile JV Entities during the third quarter of 2021 when we began accounting for them as held for sale.

Adjusted OIBDA Highlights

The following table presents (i) Adjusted OIBDA of each of our reportable segments and our corporate category for the periods indicated and (ii) the percentage change from period-to-period on both a reported and rebased basis:

• Our reported Adjusted OIBDA for the three and six months ended June 30, 2022 was flat and 1% lower, respectively, as compared to the corresponding prior-year periods.
  • Reported Adjusted OIBDA performance in Q2 and H1 2022 resulted from the net impact of organic declines in VTR and Puerto Rico, which were mostly offset by $24 million and $42 million, respectively, contributed by operations acquired from Telefónica in Costa Rica and organic growth at C&W Caribbean & Networks.

Q2 2022 Adjusted OIBDA Growth – Segment Highlights

• C&W Caribbean and Networks: Adjusted OIBDA increased on a reported and rebased basis by 11% and 12%, respectively. This performance was driven by the aforementioned rebased revenue growth and our focus on cost control leading to an improved Adjusted OIBDA margin of 46.1%.

• C&W Panama: Adjusted OIBDA was 3% lower on a reported and rebased basis. The decline was driven by higher equipment costs related to increased mobile handset sales and additional B2B projects, and higher bad debt provisions as challenging economic conditions impacted customers in lower socio-economic groups.

• Liberty Puerto Rico: Adjusted OIBDA declined by 8% on a reported and rebased basis. The decline in the quarter was impacted primarily by a higher negative equipment sales margin, as well as a lower net roaming margin and net incremental integration costs. While the year-over-year decline was impacted by a tough comparison to last year, we reported a sequential improvement from Q1, and we expect continued improvement in the second half of the year.

• VTR: Adjusted OIBDA was lower on a reported and rebased basis by 45% and 35%, respectively. The rebased decline was driven by the aforementioned decrease in revenue, and a lower overall Adjusted OIBDA margin as the revenue reduction was only partially offset by declines in variable costs, including programming and commissions. We continue to strive for operating efficiencies and our call center volume in June reached a two-year low following improvements across key repair and installation metrics.

• Liberty Costa Rica: Adjusted OIBDA grew by 180% and 4% on a reported and rebased basis, respectively. Reported growth benefited from the inclusion of Telefónica's Costa Rica operations in the quarter. Rebased performance was driven by the aforementioned rebased revenue growth partly offset by $2 million of additional integration costs and a negative non-functional FX impact of approximately $3 million, as compared to the prior-year period. The Costa Rica colon depreciated by 9% in Q2 as compared to the prior period quarter.

Net Earnings (Loss) Attributable to Shareholders

• Net earnings (loss) attributable to shareholders was $(473) million and $13 million for the three months ended June 30, 2022 and 2021, respectively, and $(389) million and $102 million for the six months ended June 30, 2022 and 2021, respectively.

Property & Equipment Additions and Capital Expenditures

The table below highlights the categories of the property and equipment additions (P&E Additions) for the indicated periods and reconciles to cash paid for capital expenditures.

Summary of Debt, Finance Lease Obligations and Cash and Cash Equivalents

The following table details the U.S. dollar equivalent balances of the outstanding principal amounts of our debt and finance lease obligations, and cash and cash equivalents at June 30, 2022:

Quarterly Subscriber Variance

ARPU per Customer Relationship

The following table provides ARPU per customer relationship for the indicated periods:

Mobile ARPU

The following table provides ARPU per mobile subscriber for the indicated periods:

N.M. – Not Meaningful.

Forward-Looking Statements and Disclaimer

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our strategies, priorities and objectives, performance, guidance and growth expectations for 2022; our digital strategy, product innovation and commercial plans and projects; expectations on demand for connectivity in the region; our anticipated integration plans, synergies, opportunities and integration costs in Puerto Rico following the AT&T Acquisition, in Costa Rica following the acquisition of Telefónica's Costa Rica business, and in Panama following the acquisition of América Móvil's Panama operations; the timing and impact of the formation of a joint venture with América Móvil in Chile; the strength of our balance sheet and tenor of our debt; our share repurchase program; and other information and statements that are not historical fact. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include events that are outside of our control, such as hurricanes and other natural disasters, political or social events, and pandemics, such as COVID-19, the uncertainties surrounding such events and efforts to contain any pandemic, the ability and cost to restore networks in the markets impacted by hurricanes or generally to respond to any such events; the continued use by subscribers and potential subscribers of our services and their willingness to upgrade to our more advanced offerings; our ability to meet challenges from competition, to manage rapid technological change or to maintain or increase rates to our subscribers or to pass through increased costs to our subscribers; the effects of changes in laws or regulation; general economic factors; our ability to obtain regulatory approval and satisfy conditions associated with acquisitions and dispositions, including the formation of a joint venture with América Móvil in Chile; our ability to successfully acquire and integrate new businesses and realize anticipated efficiencies from acquired businesses; the availability of attractive programming for our video services and the costs associated with such programming; our ability to achieve forecasted financial and operating targets; the outcome of any pending or threatened litigation; the ability of our operating companies to access cash of their respective subsidiaries; the impact of our operating companies' future financial performance, or market conditions generally, on the availability, terms and deployment of capital; fluctuations in currency exchange and interest rates; the ability of suppliers and vendors (including our third-party wireless network provider under our MVNO arrangement) to timely deliver quality products, equipment, software, services and access; our ability to adequately forecast and plan future network requirements including the costs and benefits associated with network expansions; and other factors detailed from time to time in our filings with the Securities and Exchange Commission, including our most recently filed Form 10-K and Form 10-Q. These forward-looking statements speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About Liberty Latin America

Liberty Latin America is a leading communications company operating in over 20 countries across Latin America and the Caribbean under the consumer brands VTR, Flow, Liberty, Más Móvil, and BTC. The communications and entertainment services that we offer to our residential and business customers in the region include digital video, broadband internet, telephony and mobile services. Our business products and services include enterprise-grade connectivity, data center, hosting and managed solutions, as well as information technology solutions with customers ranging from small and medium enterprises to international companies and governmental agencies. In addition, Liberty Latin America operates a subsea and terrestrial fiber optic cable network that connects approximately 40 markets in the region.

Liberty Latin America has three separate classes of common shares, which are traded on the NASDAQ Global Select Market under the symbols "LILA" (Class A) and "LILAK" (Class C), and on the OTC link under the symbol "LILAB" (Class B).

For more information, please visit www.lla.com

Footnotes

Additional Information | Cable & Wireless Borrowing Group

The following tables reflect preliminary unaudited selected financial results, on a consolidated C&W basis, for the periods indicated, in accordance with U.S. GAAP.

The following table details the U.S. dollar equivalent of the nominal amount outstanding of C&W's third-party debt and cash and cash equivalents:

• At June 30, 2022, our third-party total and proportionate net debt was $3.7 billion and $3.5 billion, respectively, our Fully-swapped Borrowing Cost was 5.0%, and the average tenor of our debt obligations (excluding vendor financing) was approximately 5.6 years.
• Our portion of Adjusted OIBDA, after deducting the noncontrolling interests' share, ("Proportionate Adjusted OIBDA") was $219 million for Q2 2022.
• Based on Q2 results, our Proportionate Net Leverage Ratio was 4.0x, calculated in accordance with C&W's Credit Agreement. At June 30, 2022, we had maximum undrawn commitments of $792 million, including $162 million under our regional facilities. At June 30, 2022, the full amount of unused borrowing capacity under our credit facilities (including regional facilities) was available to be borrowed, both before and after completion of the June 30, 2022 compliance reporting requirements.

Liberty Puerto Rico (LPR) Borrowing Group

The following table details the nominal amount outstanding of Liberty Puerto Rico's debt, finance lease obligations and cash and cash equivalents:

• At June 30, 2022, our Fully-swapped Borrowing Cost was 6.0% and the average tenor of debt was approximately 6.1 years.
• Based on our results for Q2 2022, and subject to the completion of the corresponding compliance reporting requirements, our Consolidated Net Leverage Ratio was 4.0x, calculated in accordance with LPR's Group Credit Agreement.
• At June 30, 2022, we had maximum undrawn commitments of $173 million. At June 30, 2022, the full amount of unused borrowing capacity under our revolving credit facility was available to be borrowed, both before and after completion of the June 30, 2022 compliance reporting requirements.

VTR Borrowing Group

The following table details the borrowing currency and Chilean peso equivalent of the nominal amount outstanding of VTR's debt and cash and cash equivalents:

^1. Tasa Activa Bancaria rate.

• At June 30, 2022, our Fully-swapped Borrowing Cost was 6.8% and the average tenor of debt (excluding vendor financing) was approximately 6.1 years.
• Based on our results for Q2 2022, and subject to the completion of the corresponding compliance reporting requirements, our Consolidated Net Leverage ratio was 8.9x, calculated in accordance with the indenture governing the 6.375% USD Senior Notes due 2028.
• At June 30, 2022, we had maximum undrawn commitments of $200 million (CLP 185 billion) and CLP 45 billion. At June 30, 2022, the full amount of unused borrowing capacity under our credit facilities was available to be borrowed, both before and after completion of the June 30, 2022 compliance reporting requirements.

Liberty Costa Rica Borrowing Group

The following table details the borrowing currency and Costa Rican colón equivalent of the nominal amount outstanding of Liberty Costa Rica's third-party debt and cash and cash equivalents:

Subscriber Table