Liberty Latin America Ltd. Class C Common Stock 2026 Q2 Earnings Call

Good morning, welcome to Liberty Latin America's second quarter 2026 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.lla.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, 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. 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 America's most recently filed annual report on Form 10-K and quarterly report on Form 10-Q, along with the associated press release.

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. 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 investors section of our website. I would now like to turn the call over to our CEO, Mr. Balan Nair.

Thank you, Britta, welcome everyone to Liberty Latin America's second quarter 2026 results presentation. I will be running through our group highlights and an overview of our operating results before Chris Noyes, our CFO, reviews the company's financial performance. We'll get straight to your questions. As always, I'm joined by my executive team from across our operations, I'll invite them to contribute as needed during the Q&A following our prepared remarks. As a point of housekeeping, we'll both be working from slides, which you can find on our website at www.lla.com. Starting on slide four in our highlights. The second quarter showed continued solid operational trends across large parts of the business. We added 45,000 mobile postpaid and broadband subscribers in the second quarter, with all segments reporting positive contributions.

Strong postpaid mobile trends have become a feature of our results. This quarter we were also pleased to see improvements in broadband subscriber adds with momentum that extended across markets beyond the recovery in Jamaica. We reported 3% year-over-year rebates Adjusted OIBDA growth in the second quarter. This represents an acceleration on Q1 trends and sets us up for a strong second half. We also reported another improvement in adjusted free cash flow before distribution to partners which, for the first half of 2026, was materially higher than in the same period last year. We already have cost efforts in flight, but we are excited to have announced yesterday an AI-driven cost optimizing IT services deal with Amdocs.

This agreement will help sustain continued investment in AI capabilities, innovation and digital transformation. It will help drive further material OpEx and CapEx reductions going forward as we strive to continue expanding both Adjusted OIBDA margins and Adjusted OIBDA less P&E addition margins over the coming years. We estimate the NPV value of this deal to be worth north of $250 million. Following our announced intention at the time of our Q1 earnings, we successfully completed the distribution of $500 million in preferred stock. This represents an attractive cash return for shareholders who have held onto the paper. It represents us leaning into the levered equity model as we have added gearing to the common equity. This distribution should therefore be read as an indication of our growing confidence in the prospects of our business over the coming years. Turning to share repurchases. We have continued purchasing our common equity through Q2 and more actively in July.

We continue to see a discount to fair value on our common stock. We feel this persists given perceived headwinds from Puerto Rico, despite a clear commitment to fund Liberty Puerto Rico through local assets, as exemplified by our recent financing activities. We remain focused on value opportunities and appropriate capital allocation more broadly across the group, noting our recent sale agreement in Peru. Turning now to our operations. On slide five, we review our Liberty Caribbean segment. We continue to see negative headwinds from Hurricane Melissa in Jamaica, the effect is clearly diminishing.

On the top left of the slide, we show how Liberty Caribbean's postpaid subscriber base continued to expand, adding 11,000 postpaid subscribers, of which 6,000 were delivered in Jamaica in the second quarter and with a healthy contribution from our South Caribbean markets. In June, we were the first operator to launch 5G in Jamaica. The service covers approximately 70% of the population. It is available to our postpaid subscribers both on the residential and enterprise side. It should help maintain postpaid momentum. Our market leading FMC offers continue to drive postpaid growth as we increase the penetration of our existing fixed subscriber base. We are also excited about our latest initiative in the Caribbean, Unbeatable Network, which is focused on the quality assurance of our fixed network as well as mobile connectivity enhancements, helping to further drive FMC adoption.

The Unbeatable campaign is now live in Jamaica and Cayman and coming soon to other Liberty Caribbean markets, as well as being deployed across the broader LLA group. In the Caribbean, it encompasses the unique concept of an always-on network, both in fixed and mobile. On the one hand, fixed broadband is backed up by an automatic and seamless transition from home Wi-Fi to the mobile network to manage power outages, further supported by Wi-Fi 6 and Plume Smart Wi-Fi for improved in-home connectivity. On the other hand, mobile connectivity is backed up by satellite through our Starlink DTC partnership. On the bottom left of the slide, we show how the internet net adds performance have been quite consistent. It is worth noting that the net adds figures exclude offline subscribers reconnected in the period in Jamaica.

As a reminder, these were offline customers we retained in our subscriber count through the outage period who are now back on the network and once again, revenue generating. In Jamaica specifically, we continue to recover revenue to its pre-hurricane levels. This reflects a combination of recovery in residential fixed and B2B, as well as a stronger performance in mobile. Overall, Liberty Caribbean is anchored by great products, upgraded networks, stable markets and Jamaica recovery. Both our consumer and B2B segments are in good health. On slide six, we review Cable & Wireless Panama, which as a segment provided the highest subscriber additions in the group in Q2 across postpaid and broadband. On mobile, we continue to see postpaid as a strong driver, reporting double-digit year-over-year subscriber growth. FMC continues to increase, running at over 40%.

While we see ongoing prepaid to postpaid migration, we are still also growing the prepaid subscriber base in Panama. With the industry having had some pushback on prepaid price increases in Q1, recent regulatory commentary has been more supportive on the broader pricing environment, and in July, we initiated price increases on postpaid. Initial feedback has validated this approach so far, seeing lower customer care contact volumes and reduced churn relative to historical pricing actions. To further enhance our mobile service, in the second quarter, we announced a partnership with Starlink, similar to the one we previously announced in Costa Rica. On the fixed side, we have shown a sharp increase in residential broadband subscriber adds to 10,000 in the second quarter, reflecting successful commercial activities focused on quality first driving higher gross adds as well as a significant decline in churn versus Q1.

We also registered strong net adds to both video and voice in the second quarter. As with postpaid mobile, we initiated fixed price increases in July and early feedback here has also been supportive. We look forward to the rollout of our Unbeatable campaign in Panama, underpinned by always-on Wi-Fi in the home and strengthened with the mass Starlink launch for mobile. On B2B, we continue to see a healthy pipeline, including activity around government project delivery and execution. This is our typical cycle in B2B being second half weighted. All in all, we are growing our operating metrics, we are innovating in products, and we are setting up for a good second half in Panama. Turning to slide seven and Liberty Networks, which recorded the best year-over-year revenue growth across the LLA group in Q2.

On our wholesale business, we recorded an increase in revenue growth to 14% year-over-year, driven this quarter by a healthy contribution from our project in El Salvador. We have a strong and productive working relationship with the government of El Salvador and have continued to deliver on the milestones required for the successful completion of this project. More broadly in wholesale, we see continued underlying demand for subsea capacity from international and regional carriers and increasingly from hyperscalers. We are also recognizing recent changes in the geopolitical environment in Venezuela as providing opportunities to invest for further potential growth. Working alongside CANTV, we are launching Phoenix, a submarine cable system that will have an extension of 378 kilometers and will provide 14 terabytes of capacity utilizing the Americas-II route.

This is a modest investment but will enable direct access to Caracas market, which represents about half of Venezuela's total business traffic and the country's largest concentration of enterprise and carrier demand. While still early days for Venezuela, this positions Liberty Networks well with a third network connection point to support Venezuela's critical industries and a return to economic growth and broader prosperity for the country. Meanwhile, revenue growth in our enterprise business remains robust at low single-digit levels. The Liberty Networks business continues to be a strong cash generator with a unique set of assets that provide a meshed and resilient grouping of network systems that we are carefully expanding with new and value-accretive routes. Turning to Slide 8 and Liberty Costa Rica, which remains one of our most dynamic markets and where cost-cutting efforts are starting to flow.