Sequential financial and operational growth; Q2 reported revenue 2% higher

52,000 organic internet and postpaid mobile net adds in second quarter

Buyback acceleration in Q2; $132 million stock and convertible bond repurchases

Reconfirmed 2023 financial guidance

Liberty Latin America Ltd. (“Liberty Latin America” or “LLA”) (NASDAQ: LILA and LILAK, OTC Link: LILAB) today announced its financial and operating results for the three months (“Q2”) and six months (“YTD” or “H1 2023”) ended June 30, 2023.

CEO Balan Nair commented, “Following a solid start to the year, we continued our momentum in the second quarter with sequential financial and operational growth and are well positioned to achieve our 2023 financial guidance.”

“Internet subscriber growth was led by C&W Caribbean and Panama, each generating more than 50% higher net additions year-over-year, as we continued to invest in Giga-Ready networks and create differentiated converged propositions. Postpaid mobile adds were driven by Costa Rica, where our business is the leading operator by overall market share, as well as continued growth in C&W Caribbean supported by the return of tourism in the region. Across fixed and mobile services, selective strategic price increases in several markets have landed well and will help underpin performance in the second half.”

“The group reported $1.1 billion in revenue, $140 million of operating income, and $445 million in Adjusted OIBDA in the second quarter. Operating income grew by $492 million, while a decline in reported Adjusted OIBDA was driven by the deconsolidation of VTR. Adjusted OIBDA was 4% higher on a rebased basis, year-over-year, as we continued to focus on efficiency and benefited from our structural operating leverage.”

“Capital allocation remains a key focus for us. Following the renewal of our buyback authorization earlier in the year, we accelerated activity in the second quarter, repurchasing $57 million of our equity and $74 million of convertible notes, close to three times our aggregate first quarter activity.”

“Looking ahead to the second half of the year, we remain confident that we will achieve our 2023 financial guidance targets supported by continued subscriber additions and organic financial momentum, synergies from integration activities, particularly in Panama, and our focus on operating cost and capex discipline.”

Q2 Business Highlights

• C&W Caribbean: continued organic subscriber additions and financial growth
  • 23,000 internet and mobile postpaid organic adds
  • Reported and rebased Adj. OIBDA growth of 9% and 8%, respectively
• C&W Panama: synergies from prior year Claro Panamá acquisition drive strong growth
  • Reported and rebased revenue growth of 28% and 4%, respectively
  • Reported and rebased Adj. OIBDA growth of 33% and 42%, respectively
• Liberty Networks: solid performance
  • Reported and rebased revenue growth of 2% and 5%, respectively
  • Rebranded as “Liberty Networks”, focus on investing in infrastructure and enterprise solutions to meet our customers' digital and connectivity needs
• Liberty Puerto Rico: sequential mobile service revenue stable; Adj. OIBDA growth
  • RGU adds drive fixed revenue growth YoY, postpaid mobile subscribers stable
  • Migration to new mobile platform progressing
• Liberty Costa Rica: postpaid operational momentum and strong Adj. OIBDA growth
  • Prepaid to postpaid migration efforts drive postpaid adds
  • Adj. OIBDA up 41% and 10% on a reported and rebased basis, respectively

FY 2023 LLA Financial Guidance - Reconfirmed

• Adjusted OIBDA mid-to-high single digit rebased growth

• P&E additions as a percentage of revenue at ~16%

• Adjusted FCF of ~$300 million, before distributions to noncontrolling interests

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.

• Reported revenue declined by 8% for each of the three and six months ended June 30, 2023.
  • Reported revenue declined in Q2 and H1 2023 as (1) the additions of $35 million and $70 million, respectively, from the acquisition of América Móvil's Panama operations (Claro Panamá) on July 1, 2022, (2) net foreign exchange benefits of $25 million and $39 million, respectively, and (3) organic growth in Liberty Networks and C&W Panama, were more than offset by negative year-over-year impacts of $150 million and $321 million, respectively, related to VTR's deconsolidation following the formation of the Chile JV in October 2022.

Q2 2023 Revenue Growth – Segment Highlights

• C&W Caribbean: revenue was flat year-over-year on a reported and rebased basis.
  • Fixed residential revenue increased 1% on a reported and rebased basis. This was driven by growth in our average number of fixed subscribers, primarily in Jamaica where we added 41,000 RGUs over the past twelve months, and higher ARPU from our broadband and video services.
  • Mobile revenue was up 6% on a reported and rebased basis. The increase was primarily due to a higher average number of postpaid mobile subscribers, driven by our continued focus on fixed-mobile convergence propositions. We have also continued to see an increase in inbound roaming revenue as tourism has recovered in the region.
  • B2B revenue was 5% lower on both a reported and rebased basis. The discontinuation of a non-core transit services agreement at the beginning of 2023 at C&W Jamaica had a $10 million impact on revenue as compared to the prior year quarter. This translates to a 280 basis point and 760 basis point impact on C&W Caribbean's total revenue and B2B revenue growth rates, respectively and more than offset underlying B2B growth in the period.
• C&W Panama: revenue grew by 28% and 4% on a reported and rebased basis, respectively. Reported performance benefited from the inclusion of América Móvil's Panama operations in the quarter.
  • Fixed residential revenue was up 16% and 8% on a reported and rebased basis, respectively. Rebased growth was driven by RGU additions of 60,000 over the past twelve months, following investments in our networks, products and commercial activities.
  • Mobile revenue increased by 44% on a reported basis and declined 1% on a rebased basis. Subscription revenue was stable, however a reduction in interconnection revenue drove the year-over-year rebased decline.
  • B2B revenue grew by 17% and 7% on a reported and rebased basis, respectively. The year-over-year rebased performance was driven by increased revenue from government related projects and data services.
• Liberty Networks: revenue grew by 2% and 5% on a reported and rebased basis, respectively. Growth on a rebased basis was driven by higher wholesale network revenue associated with a significant customer that is recognized on a cash basis, and growth in enterprise-related connectivity and managed services.
• Liberty Puerto Rico: revenue was 3% lower on a reported and rebased basis.
  • Residential fixed revenue growth was driven by net subscriber additions totaling 33,000 over the past twelve months. The prior year period also included the negative impact of credits issued to customers as a result of power outages.
  • Residential mobile revenue was lower compared to the prior-year period. This was driven by: (1) lower ARPU from mobile services, due to a higher proportion of wearable devices, an increase in discounted plans and the impact of higher contract asset amortization following increases in handset sales and subsidy levels over the past twelve months, (2) lower roaming revenue, (3) reduced equipment sales in Q2 23 as subsidy levels were lowered, and (4) a decline in the average number of prepaid mobile subscribers.
    • Sequentially, subscription revenue and ARPU were stable with overall revenue lower primarily due to reduced handset sales following a reduction in our handset subsidy levels.
• Liberty Costa Rica: revenue grew by 25% on a reported basis and declined by 1% on a rebased basis. Reported performance benefited from a $26 million positive foreign exchange impact year-over-year, as the Costa Rican colon appreciated against the U.S. dollar. The year-over-year rebased performance was driven by lower fixed ARPU due to increased retention discounts and declines in higher ARPU plans. Mobile performance was flat compared to the prior-year period with continued commercial success migrating customers from prepaid to postpaid plans.

Operating Income (Loss)

• Operating income (loss) was $140 million and ($353 million) for the three months ended June 30, 2023 and 2022, respectively, and $253 million and ($168 million) for the six months ended June 30, 2023 and 2022, respectively.
  • The improvements from operating loss to operating income are primarily due to the net impact of: (i) lower impairment, restructuring and other operating items, net, mostly due to goodwill impairments recorded during the second quarter of 2022, (ii) higher depreciation and amortization and (iii) lower Adjusted OIBDA.

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:

N.M. – Not Meaningful.

• Our reported Adjusted OIBDA for the three and six months ended June 30, 2023 declined by 3% and 5%, respectively, as compared to the corresponding prior-year periods.
  • Reported Adjusted OIBDA declined in Q2 and H1 2023 as organic growth in C&W Panama, C&W Caribbean and Liberty Costa Rica was more than offset by the deconsolidation of VTR.

Q2 2023 Adjusted OIBDA Growth – Segment Highlights

• C&W Caribbean: Adjusted OIBDA increased by 9% and 8% on a reported and rebased basis, respectively. Performance was driven by lower direct costs, including declines in programming expenses. Our Adjusted OIBDA margin improved by over 300 basis points year-over-year to 41%.

• C&W Panama: Adjusted OIBDA increased on a reported and rebased basis by 33% and 42%, respectively. Rebased growth was driven by the aforementioned revenue performance and value capture activities related to the Claro Panama acquisition.

• Liberty Networks: Adjusted OIBDA declined by 4% and 2% on a reported and rebased basis, respectively. Our rebased performance was driven by (i) higher staff costs, (ii) lower amounts of capitalizable costs associated with licenses due to the term and nature of service offerings, and (iii) higher software license costs; offsetting the aforementioned revenue growth in the quarter.

• Liberty Puerto Rico: Adjusted OIBDA declined by 3% on a reported and rebased basis. The performance was driven by the net impact of our aforementioned revenue decline, lower direct costs, primarily due to reduced subsidies, and higher other operating costs year-over-year, including higher integration costs.

• Liberty Costa Rica: Adjusted OIBDA grew by 41% and 10% on a reported and rebased basis, respectively. Rebased performance was driven by favorable foreign exchange movements on non-CRC denominated costs and execution of our integration plan.

Net Earnings (Loss) Attributable to Shareholders

• Net earnings (loss) attributable to shareholders was $38 million and ($475 million) for the three months ended June 30, 2023 and 2022, respectively, and ($12 million) and ($394 million) for the six months ended June 30, 2023 and 2022, 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, net.

1. Table excludes Liberty Networks as that segment only provides B2B-related services.

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, 2023:

1. Represents the amount held by Liberty Latin America on a standalone basis plus the aggregate amount held by subsidiaries of Liberty Latin America that are outside our borrowing groups.
2. Represents the C&W borrowing group, including the C&W Caribbean, Liberty Networks and C&W Panama reportable segments.
3. Cash amount includes restricted cash that serves as collateral against certain lines of credit associated with the funding received from the FCC to continue to expand and improve our fixed network in Puerto Rico.
4. Consolidated leverage ratios are non-GAAP measures. For additional information, including definitions of our consolidated leverage ratios and required reconciliations, see Non-GAAP Reconciliations below.
5. For purposes of calculating our weighted average tenor, total debt excludes vendor financing and finance lease obligations.
6. At June 30, 2023, the full amount of unused borrowing capacity under our subsidiaries' revolving credit facilities was available to be borrowed, both before and after completion of the June 30, 2023 compliance reporting requirements.

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:

1. The FX-Neutral change represents the percentage change on sequential basis adjusted for FX impacts and is calculated by adjusting the current-period figures to reflect translation at the foreign currency rates used to translate the sequential prior quarter amounts.
2. The ARPU per customer relationship amounts in Costa Rican colones for the three months ended June 30, 2023 and March 31, 2023 were CRC 25,451 and CRC 25,677, respectively.
3. The mobile ARPU amount in Costa Rican colones for the three months ended June 30, 2023 and March 31, 2023 were CRC 3,579 and CRC 3,609, respectively.

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 2023; our digital strategy, product innovation and commercial plans and projects; subscriber growth; 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 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, 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 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 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 BTC, Flow, Liberty and Más Móvil, and through ClaroVTR, our joint venture in Chile. 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.

1. Rebased growth rates are a non-GAAP measure. The indicated growth rates are rebased for the estimated impacts of (i) an acquisition, (ii) a disposition, (iii) the acquisition by our Liberty Costa Rica segment of the B2B Costa Rican operations within our Liberty Networks segment and (iv) FX. See Non-GAAP Reconciliations below.
2. We provide rebased revenue and Adjusted OIBDA growth rates, each a non-GAAP measure, for Liberty Latin America excluding VTR in light of the October 2022 deconsolidation of VTR that occurred in connection with the closing of our joint venture in Chile with América Móvil. See the tables below for the required non-GAAP reconciliations.
3. Consolidated Adjusted OIBDA is a non-GAAP measure. For the definition of Adjusted OIBDA and required reconciliations, see Non-GAAP Reconciliations below.
4. Adjusted Free Cash Flow (“Adjusted FCF”) is a non-GAAP measure. For the definition of Adjusted FCF and required reconciliations, see Non-GAAP Reconciliations below.
5. See Glossary for the definition of RGUs and mobile subscribers. Organic figures exclude RGUs and mobile subscribers of acquired entities at the date of acquisition and other non-organic adjustments, but include the impact of changes in RGUs and mobile subscribers from the date of acquisition. All subscriber / RGU additions or losses refer to net organic changes, unless otherwise noted.

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.