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 ended March 31, 2019 (“Q1”).
CEO Balan Nair commented, “Our first quarter performance reflects a good
start to the year. We delivered record Q1 RGU additions of 73,000, with
subscriber growth across all reporting segments. In particular, C&W
added 32,000 RGUs, its best quarter since our 2016 acquisition, and we
continued to add RGUs in Puerto Rico following the restoration of our
network in 2018. We see relatively low penetration of high-speed
connectivity across our markets and further potential for fixed
subscriber growth as we deliver leading product propositions and expand
our high-speed footprint. In Q1, we added or upgraded over 80,000 homes
and are on-track to meet our full-year targets.”
“In mobile, we added 11,000 subscribers, with gains in both C&W and
Chile. In fact, our enhanced customer value propositions in Panama
contributed to our best quarter in subscriber gains at C&W in two years.
Besides Panama, we rolled out refreshed campaigns in the Bahamas in Q1,
as well as Jamaica and other markets in April. We expect these launches
to drive financial momentum in the coming quarters. High-speed
penetration continued to grow in the quarter as we reached 40% of our
subscriber base with LTE packages and invested in increasing our LTE
coverage.”
“Our rebased revenue and OCF growth of 4% and 9%, respectively, was
driven by the strong performance in Puerto Rico. We also generated $48
million of Adjusted FCF3 in Q1, a significant improvement
over the prior-year period.”
“We remain committed to a disciplined and diligent approach in
evaluating potential transactions and recently completed the accretive
acquisition of UTS. This expands our product portfolio in Curaçao,
creates a national champion, and enables us to deliver improved customer
experiences while achieving cost benefits through additional scale.”
“We continue to work on our five strategic priorities; driving financial
and operational performance, transforming our business, creating a
strong culture, driving inorganic growth, and optimizing our balance
sheet. We believe delivery of these priorities will create meaningful
value for our customers and shareholders.”
“As we look out to the remainder of 2019, our team is focused on
subscriber growth and operational efficiencies, which we anticipate will
benefit our financial results in the second half of the year.”
Business Highlights
-
C&W building operational momentum:
-
Record RGU growth driven by broadband, with 32,000 subscribers
added in total -
Mobile subscriber performance stabilizing, led by 21,000 additions
in Panama - New customer value propositions launched across markets
-
Record RGU growth driven by broadband, with 32,000 subscribers
-
VTR/Cabletica steady start to the year:
-
Broadband growth in both Chile and Costa Rica drove total RGU
additions of 20,000 - Cabletica delivered strong rebased revenue and OCF growth
- VTR expanded its leading network, adding over 40,000 homes
-
Broadband growth in both Chile and Costa Rica drove total RGU
-
Liberty Puerto Rico continuing to grow:
-
22,000 RGUs added in the first quarter, growth across all products
led by broadband -
Ookla® Speedtest® Award Winner for second
consecutive year - Expanding footprint with over 5,000 new homes passed
-
22,000 RGUs added in the first quarter, growth across all products
Acquisition of United Telecommunication Services (“UTS”)
-
On March 31, 2019, we completed the acquisition of an 87.5% interest
in UTS for a cash purchase price of $161 million, subject to certain
potential post-closing adjustments -
UTS provides fixed and mobile services to the island nations of
Curaçao, St. Maarten, St. Martin, Bonaire, St. Barths, St. Eustatius
and Saba -
The acquisition was funded through a $170 million draw on the C&W
Revolving Credit Facility -
Due to the timing of the acquisition, we did not record any revenue or
earnings attributable to UTS in our condensed consolidated statement
of operations for the three months ended March 31, 2019
|
Financial Highlights |
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|
Liberty Latin America |
Q1 2019 |
Q1 2018 |
YoY |
|||||||||||
| (in millions, except % amounts) | ||||||||||||||
| Revenue | $ | 943 | $ | 910 | 4 | % | ||||||||
| OCF | $ | 366 | $ | 341 | 9 | % | ||||||||
| Property & equipment additions | $ | 139 | $ | 194 | (28 | %) | ||||||||
| As a percentage of revenue | 15 | % | 21 | % | ||||||||||
| Operating income | $ | 113 | $ | 98 | 15 | % | ||||||||
| Adjusted FCF | $ | 48 | $ | (46 | ) | |||||||||
| Cash provided by operating activities | $ | 188 | $ | 163 | ||||||||||
| Cash used by investing activities | $ | (286 | ) | $ | (188 | ) | ||||||||
| Cash provided (used) by financing activities | $ | 39 | $ | (12 | ) | |||||||||
|
|
||||||||||||||
|
* Revenue and OCF YoY growth rates are on a rebased basis. |
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|
Subscriber Growth4 |
||||||||||
| Three months ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Organic RGU net additions (losses) by product | ||||||||||
| Video | 14,900 | 2,400 | ||||||||
| Data | 50,100 | 37,000 | ||||||||
| Voice | 8,000 | (6,100 | ) | |||||||
| Total | 73,000 | 33,300 | ||||||||
| Organic RGU net additions (losses) by segment | ||||||||||
| C&W | 31,600 | 25,100 | ||||||||
| VTR/Cabletica | 19,700 | 23,600 | ||||||||
| Liberty Puerto Rico | 21,700 | (15,400 | ) | |||||||
| Total | 73,000 | 33,300 | ||||||||
| Organic Mobile SIM additions (losses) by product | ||||||||||
| Postpaid | 10,400 | 3,400 | ||||||||
| Prepaid | 400 | (14,400 | ) | |||||||
| Total | 10,800 | (11,000 | ) | |||||||
| Organic Mobile SIM additions (losses) by segment | ||||||||||
| C&W | 800 | (19,800 | ) | |||||||
| VTR/Cabletica | 10,000 | 8,800 | ||||||||
| Total | 10,800 | (11,000 | ) | |||||||
-
Customer additions: Organic fixed
customer additions of 36,000 in Q1 2019, more than double the
additions in the prior-year period, including growth across all
segments. -
Product additions: Organic fixed RGU
additions of 73,000 and organic mobile subscriber additions of 11,000
in Q1 2019, both significantly improved as compared to the prior-year
period. -
C&W added 32,000 fixed RGUs during
Q1; our best quarter since Q2 2016.-
Broadband additions totaled 17,000, driven by success in our
largest markets of Jamaica and Panama where we added 7,000 and
6,000 RGUs, respectively, reflecting penetration on our expanding
high-speed networks. Our broadband service levels continue to
improve, particularly in Panama where we launched top speeds of up
to 600 Mbps in the quarter and are now delivering up to 1 Gbps in
certain areas. -
Video RGU additions of 3,000 were flat year-over-year. Panama had
another strong quarter, adding 5,000 RGUs, as we focused on our
bundled propositions. -
Fixed-line telephony RGU additions of 12,000 were driven by our
successful bundling strategy, particularly in Panama, Jamaica and
Trinidad. -
Mobile subscribers grew by 1,000 in Q1, our first quarter of
growth since Q1 2017.-
Panama led this overall performance with 21,000 additions, as
we started to see the benefits of recent marketing campaigns
and customer retention activity. -
In Jamaica, we recorded net subscriber losses of 14,000, as
expected following increased activations during the holiday
period (similarly, in Q1 2018 we lost 12,000 mobile
subscribers in Jamaica). In April, we launched new customer
value propositions, which we believe will drive subscriber
additions and revenue growth. -
In the Bahamas, we recorded our best quarterly result since
the introduction of a new mobile competitor in 2016, with
2,000 subscribers lost in the quarter.
-
Panama led this overall performance with 21,000 additions, as
-
Broadband additions totaled 17,000, driven by success in our
-
VTR/Cabletica RGUs increased by 20,000
during Q1, with additions across both markets. In Costa Rica,
Cabletica added 13,000 RGUs, driven by broadband additions over our
expanding high-speed network. VTR added 7,000 RGUs as broadband and
video subscriber growth more than offset continued fixed-line voice
attrition.-
VTR’s mobile subscribers grew by 10,000 in Q1. At March 31, 2019,
our mobile subscriber base totaled 266,000, of which 97% were on
postpaid plans.
-
VTR’s mobile subscribers grew by 10,000 in Q1. At March 31, 2019,
-
Liberty Puerto Rico added 22,000 fixed
RGUs in Q1, continuing the momentum we had in H2 2018. This growth was
driven by our compelling product propositions delivered over our
leading network, which was recognized by Ookla® for the
second consecutive year as the fastest in Puerto Rico.
Revenue Highlights
The following table presents (i) revenue of each of our reportable
segments for the comparative period and (ii) the percentage change from
period-to-period on both a reported and rebased basis:
| Three months ended | Increase/(decrease) | |||||||||||||||||
| March 31, | ||||||||||||||||||
| 2019 | 2018 | % | Rebased % | |||||||||||||||
| in millions, except % amounts | ||||||||||||||||||
| C&W | $ | 569.8 | $ | 585.5 | (2.7 | ) | (1.7 | ) | ||||||||||
| VTR/Cabletica | 276.5 | 263.8 | 4.8 | 3.9 | ||||||||||||||
| Liberty Puerto Rico | 98.6 | 61.8 | 59.5 | 59.5 | ||||||||||||||
| Intersegment eliminations | (2.2 | ) | (1.2 | ) |
N.M. |
N.M. |
||||||||||||
| Total | $ | 942.7 | $ | 909.9 | 3.6 | 4.0 | ||||||||||||
|
N.M. – Not Meaningful. |
||||||||||||||||||
-
Our reported revenue for the three months ended March 31, 2019
increased by 4%.-
Reported revenue growth was primarily driven by (1) an increase of
$37 million at Liberty Puerto Rico, mainly driven by the favorable
comparison against the prior-year quarter resulting from the
recovery following the 2017 hurricanes and (2) an increase of $33
million related to the acquisition of Cabletica, partially offset
by a negative foreign exchange (“FX”) impact of $32 million,
primarily related to a depreciation of the Chilean peso in
relation to the US dollar.
-
Reported revenue growth was primarily driven by (1) an increase of
Q1 2019 Rebased Revenue Growth – Segment Highlights
-
C&W: Rebased revenue declined by 2%
year-over-year.-
Mobile revenue attrition of 13% on a rebased basis was partly
offset by rebased revenue growth of 5% in residential fixed and 2%
in B2B. -
The reduction in mobile revenue was primarily attributable to
lower ARPU in Panama and the Bahamas and reduced subscribers
across our markets as compared to the prior-year period. -
Fixed revenue growth was driven by volume as we added 103,000
fixed RGUs over the last twelve months, reflecting an improvement
from 60,000 net additions in the preceding twelve months. Overall,
growth in broadband and video revenue more than offset a decline
in fixed voice revenue. -
B2B growth was driven by increased managed services revenue in
Panama, our LatAm operations and Jamaica. Our subsea operations
also grew, driven by increasing demand for bandwidth. Performance
in the quarter was negatively impacted by $5 million as compared
to the prior-year period due to a change in the timing of revenue
for directory services recognized within the year.
-
Mobile revenue attrition of 13% on a rebased basis was partly
-
VTR/Cabletica: Rebased revenue growth of
4% was primarily driven by improvement in (1) residential fixed
subscription revenue from increases in ARPU per RGU and (2) B2B
service revenue, driven by growth in subscribers. -
Liberty Puerto Rico: Rebased revenue
increased by $37 million to $99 million, driven by the favorable
comparison against the prior-year quarter resulting from the recovery
following the 2017 hurricanes. On a sequential basis, compared to Q4
2018, revenue increased by 5% or $5 million.
Operating Income
-
Operating income was $113 million and $98 million for the three months
ended March 31, 2019 and 2018, respectively.-
Operating income increased during Q1 2019, as compared with Q1
2018, primarily due to the net effect of (i) higher OCF, as
further described below, (ii) an increase in depreciation and
amortization and (iii) lower restructuring charges, primarily at
C&W.
-
Operating income increased during Q1 2019, as compared with Q1
Operating Cash Flow Highlights
The following table presents (i) OCF of each of our reportable segments
and our corporate category for the comparative period and (ii) the
percentage change from period to period on both a reported and rebased
basis:
| Three months ended | Increase/(decrease) | |||||||||||||||||
| March 31, | ||||||||||||||||||
| 2019 | 2018 | % | Rebased % | |||||||||||||||
| in millions, except % amounts | ||||||||||||||||||
| C&W | $ | 222.5 | $ | 229.1 | (2.9 | ) | (2.0 | ) | ||||||||||
| VTR/Cabletica | 106.9 | 105.0 | 1.8 | 3.2 | ||||||||||||||
| Liberty Puerto Rico | 47.9 | 18.0 | 166.1 | 166.1 | ||||||||||||||
| Corporate | (11.5 | ) | (11.3 | ) | 1.8 | 1.8 | ||||||||||||
| Total | $ | 365.8 | $ | 340.8 | 7.3 | 8.5 | ||||||||||||
| OCF Margin | 38.8 | % | 37.5 | % | ||||||||||||||
-
Our reported OCF for the three months ended March 31, 2019 increased
by 7%.-
Reported OCF growth was driven by (1) an increase of $30 million
at Liberty Puerto Rico, primarily related to our strong recovery
from the 2017 hurricanes and (2) an increase of $12 million from
the inclusion of Cabletica, partially offset by a negative FX
impact of $12 million, primarily related to the Chilean peso.
-
Reported OCF growth was driven by (1) an increase of $30 million
Q1 2019 Rebased OCF Growth – Segment Highlights
-
C&W: Rebased OCF was 2% lower, driven
by the aforementioned revenue decline (including the $5 million
negative impact due to a change in the timing of revenue for directory
services), partly offset by a net decrease in costs, despite higher
bad debt and collection expenses as compared to the first quarter of
2018 where we benefited from a $3 million recovery related to the
release of provisions established following the impacts of the 2017
hurricanes. -
VTR/Cabletica: Delivered rebased OCF
growth of 3%, driven by a strong performance at Cabletica. VTR’s
rebased OCF performance was impacted by increased costs related to our
digitization initiatives, higher sales and marketing, and increased
call center volumes. -
Liberty Puerto Rico: The increase of $30
million was driven by our revenue performance, as the prior-year was
negatively impacted by the 2017 hurricanes. -
Corporate: Costs were in-line
year-over-year.
Net Loss Attributable to Shareholders
-
Net loss attributable to shareholders was $42 million and $45 million
for the three months ended March 31, 2019 and 2018, respectively.
Property and Equipment Additions and Capital Expenditures
The table below highlights the categories of the property and equipment
additions for the indicated periods and reconciles those additions to
the capital expenditures that are presented in the condensed
consolidated statements of cash flows included in our Form 10-Q.
| Three months ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
|
in millions, except % amounts |
||||||||||
| Customer Premises Equipment | $ | 71.9 | $ | 65.5 | ||||||
| New Build & Upgrade | 21.6 | 80.3 | ||||||||
| Capacity | 10.9 | 7.2 | ||||||||
| Baseline | 23.3 | 27.7 | ||||||||
| Product & Enablers | 11.4 | 13.3 | ||||||||
| Property and equipment additions | 139.1 | 194.0 | ||||||||
| Assets acquired under capital-related vendor financing arrangements | (10.9 | ) | (20.7 | ) | ||||||
| Assets acquired under finance leases | (0.1 | ) | (0.6 | ) | ||||||
| Changes in current liabilities related to capital expenditures | 31.5 | 15.5 | ||||||||
| Capital expenditures1 | $ | 159.6 | $ | 188.2 | ||||||
| Property and equipment additions as % of revenue | 14.8 | % | 21.3 | % | ||||||
| Property and Equipment Additions of our Reportable Segments: | ||||||||||
| C&W | $ | 63.6 | $ | 67.2 | ||||||
| VTR/Cabletica | 54.1 | 57.0 | ||||||||
| Liberty Puerto Rico | 19.8 | 69.8 | ||||||||
| Corporate | 1.6 | — | ||||||||
| Property and equipment additions | $ | 139.1 | $ | 194.0 | ||||||
| 1. |
The capital expenditures that we report in our condensed consolidated statements of cash flows do not include amounts that are financed under capital-related vendor financing or finance lease arrangements. Instead, these amounts are reflected as non-cash additions to our property and equipment when the underlying assets are delivered and as repayments of debt when the principal is repaid. |
|
Segment Highlights
-
C&W: Property and equipment additions
of $64 million represented 11% of revenue in Q1, in-line with the
prior-year period. In Q1 2019, new build and upgrade initiatives
delivered over 35,000 new or upgraded homes. -
VTR/Cabletica: Property and equipment
additions of $54 million represented 20% of revenue in Q1, a reduction
compared to 22% in the prior-year period. The reduction in Q1 2019 was
driven by the inclusion of Cabletica. In Q1 2019, new build and
upgrade initiatives delivered over 40,000 new or upgraded homes. -
Liberty Puerto Rico: Property and
equipment additions of $20 million represented 20% of revenue in Q1, a
significant reduction compared to the prior-year period, primarily due
to a decline in property and equipment additions together with an
increase in revenue following the recovery from the 2017 hurricanes.
In Q1 2019, new build and upgrade initiatives delivered over 5,000 new
homes passed.
Leverage and Liquidity (at March 31, 2019)
-
Total principal amount of debt and finance leases:
$6,789 million. -
Leverage ratios: Consolidated gross and
net leverage ratios of 4.3x and 3.9x, respectively.-
These ratios were calculated on a latest two quarters annualized
(“L2QA”) basis and therefore include the $64 million of positive
contribution from the insurance settlements of Hurricanes Irma,
Maria and Matthew in Q4 2018. This contribution decreased our
gross and net leverage ratios by approximately 0.3x and 0.4x,
respectively. -
These ratios also include $170 million of Revolving Credit
Facility drawings at C&W related to the acquisition of UTS,
without any corresponding OCF contribution as the transaction was
completed effective March 31, 2019.
-
These ratios were calculated on a latest two quarters annualized
-
Average debt tenor5: 5.4
years, with approximately 92% not due until 2022
or beyond. -
Borrowing costs: Blended, fully-swapped
borrowing cost of our debt was approximately 6.4%. -
Cash and borrowing availability: $569
million of cash and $896 million of aggregate unused borrowing capacity6
under our revolving credit facilities.
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 with respect to our strategies, priorities,
financial performance and guidance, operational and financial momentum,
and future growth prospects and opportunities, including B2B
opportunities and inorganic growth opportunities (like our acquisitions
of Cabletica and UTS) and the potential benefits from such
opportunities; our expectations with respect to subscribers, customer
data usage, revenue, ARPU, OCF and Adjusted FCF; statements regarding
the development, enhancement, and expansion of, our superior networks
(including our plans to deliver new or upgraded homes in 2019 and our
plans to expand LTE coverage and usage), our customer value propositions
and the anticipated impacts of such activity including increased
subscribers and revenue; our estimates of future P&E additions and
operating expenditures, each as a percentage of revenue; statements
regarding the establishment of a new Operations Center in Panama and the
strength of our balance sheet and tenor of our debt; 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, the ability and cost to restore networks in the
markets impacted by hurricanes; 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; 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 telecommunications company operating
in over 20 countries across Latin America and the Caribbean under the
consumer brands VTR, Flow, Liberty, Más Móvil, BTC, UTS and Cabletica.
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 over 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
| 1. |
The indicated growth rates are rebased for the estimated impacts |
|
| 2. |
For the definition of Operating Cash Flow (“OCF”) and required |
|
| 3. |
For the definition of Adjusted Free Cash Flow (“Adjusted FCF”) and |
|
| 4. |
See Footnotes for Operating Data and Subscriber Variance Tables |
|
| 5. |
For purposes of calculating our average tenor, total debt excludes vendor financing and finance lease obligations. |
|
| 6. |
At March 31, 2019, we had undrawn commitments of $896 million. At March 31, 2019, 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 March 31, 2019 compliance reporting requirements. For information regarding limitations on our ability to access this liquidity, see the discussion under “Material Changes in Financial Condition” in our most recently filed Quarterly Report on Form 10-Q. |
|
Balance Sheets, Statements of Operations and Statements of Cash Flows
The condensed consolidated balance sheets, statements of operations and
statements of cash flows of Liberty Latin America are included in our
Quarterly Report on Form 10-Q.
Rebase Information
For purposes of calculating rebased growth rates on a comparable basis
for all businesses that we owned during 2019, we have adjusted our
historical revenue and OCF for the three months ended March 31, 2018 to
(i) include the pre-acquisition revenue and OCF of Cabletica in our
rebased amounts for the three months ended March 31, 2018 to the same
extent that the revenue and OCF of Cabletica is included in our results
for the three months ended March 31, 2019, and (ii) reflect the
translation of our rebased amounts for the three months ended March 31,
2018 at the applicable average foreign currency exchange rates that were
used to translate our results for the three months ended March 31, 2019.
We have included Cabletica in the determination of our rebased revenue
and OCF for the three months ended March 31, 2018. We have reflected the
revenue and OCF of Cabletica in our 2018 rebased amounts based on what
we believe to be the most reliable information that is currently
available to us (generally pre-acquisition financial statements), as
adjusted for the estimated effects of (a) any significant differences
between U.S. GAAP and local generally accepted accounting principles,
(b) any significant effects of acquisition accounting adjustments, (c)
any significant differences between our accounting policies and those of
the acquired entities and (d) other items we deem appropriate. We do not
adjust pre-acquisition periods to eliminate nonrecurring items or to
give retroactive effect to any changes in estimates that might be
implemented during post-acquisition periods. As we did not own or
operate the acquired businesses during the pre-acquisition periods, no
assurance can be given that we have identified all adjustments necessary
to present their revenue and OCF on a basis that is comparable to the
corresponding post-acquisition amounts that are included in our
historical results or that the pre-acquisition financial statements we
have relied upon do not contain undetected errors. The adjustments
reflected in our rebased amounts have not been prepared with a view
towards complying with Article 11 of Regulation S-X. In addition, the
rebased growth percentages are not necessarily indicative of the revenue
and OCF that would have occurred if these transactions had occurred on
the dates assumed for purposes of calculating our rebased amounts or the
revenue and OCF that will occur in the future. The rebased growth
percentages have been presented as a basis for assessing growth rates on
a comparable basis, and are not presented as a measure of our pro forma
financial performance. The following table provides adjustments made to
the revenue and OCF amounts for the three months ended March 31, 2018 to
derive our rebased growth rates. Due to rounding, certain rebased growth
rate percentages may not recalculate.
| Revenue | OCF | |||||||||||
| in millions | ||||||||||||
| Acquisition | $ | 29.8 | $ | 9.4 | ||||||||
| Foreign currency | (33.7 | ) | (12.9 | ) | ||||||||
| Total | $ | (3.9 | ) | $ | (3.5 | ) | ||||||
OCF Definition and Reconciliation
As used herein, OCF has the same meaning as the term “Adjusted OIBDA”
that is referenced in our Form 10-Q. OCF is the primary measure used by
our chief operating decision maker to evaluate segment operating
performance. OCF is also a key factor that is used by our internal
decision makers to (i) determine how to allocate resources to segments
and (ii) evaluate the effectiveness of our management for purposes of
incentive compensation plans. As we use the term, OCF is defined as
operating income or loss before depreciation and amortization,
share-based compensation, provisions and provision releases related to
significant litigation and impairment, restructuring and other operating
items. Other operating items include (i) gains and losses on the
disposition of long-lived assets, (ii) third-party costs directly
associated with successful and unsuccessful acquisitions and
dispositions, including legal, advisory and due diligence fees, as
applicable, and (iii) other acquisition-related items, such as gains and
losses on the settlement of contingent consideration. Our internal
decision makers believe OCF is a meaningful measure because it
represents a transparent view of our recurring operating performance
that is unaffected by our capital structure and allows management to (i)
readily view operating trends, (ii) perform analytical comparisons and
benchmarking between segments and (iii) identify strategies to improve
operating performance in the different countries in which we operate. We
believe our OCF measure is useful to investors because it is one of the
bases for comparing our performance with the performance of other
companies in the same or similar industries, although our measure may
not be directly comparable to similar measures used by other public
companies. OCF should be viewed as a measure of operating performance
that is a supplement to, and not a substitute for, operating income, net
earnings or loss, cash flow from operating activities and other U.S.
GAAP measures of income or cash flows. A reconciliation of our operating
income to total OCF is presented in the following table:
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| in millions | |||||||||||
| Operating income | $ | 113.3 | $ | 98.3 | |||||||
| Share-based compensation expense | 14.7 | 6.5 | |||||||||
| Depreciation and amortization | 217.3 | 202.3 | |||||||||
| Impairment, restructuring and other operating items, net | 20.5 | 33.7 | |||||||||
| Total OCF | $ | 365.8 | $ | 340.8 | |||||||
Summary of Debt, Finance Lease Obligations & Cash and Cash Equivalents
The following table details the U.S. dollar equivalent balances of the
outstanding principal amounts of our debt, finance lease obligations and
cash and cash equivalents at March 31, 2019:
| Debt |
Finance lease |
Debt and |
Cash and cash |
||||||||||||||||
| in millions | |||||||||||||||||||
| Liberty Latin America1 | $ | — | $ | 1.5 | $ | 1.5 | $ | 61.9 | |||||||||||
| C&W | 4,090.6 | 9.8 | 4,100.4 | 324.6 | |||||||||||||||
| VTR | 1,618.4 | 0.4 | 1,618.8 | 109.7 | |||||||||||||||
| Liberty Puerto Rico | 942.5 | — | 942.5 | 55.2 | |||||||||||||||
| Cabletica | 125.6 | — | 125.6 | 17.4 | |||||||||||||||
| Total | $ | 6,777.1 | $ | 11.7 | $ | 6,788.8 | $ | 568.8 | |||||||||||
| 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. Subsidiaries of Liberty Latin America that are outside our borrowing groups rely on funds provided by our borrowing groups to satisfy their liquidity needs. |
|
Adjusted Free Cash Flow Definition and Reconciliation
We define Adjusted FCF as net cash provided by our operating activities,
plus (i) cash payments for third-party costs directly associated with
successful and unsuccessful acquisitions and dispositions,(ii) expenses
financed by an intermediary and (iii) insurance recoveries related to
damaged and destroyed property and equipment, less (a) capital
expenditures, (b) distributions to noncontrolling interest owners, (c)
principal payments on amounts financed by vendors and intermediaries and
(d) principal payments on finance leases. Effective December 31, 2018,
and in connection with our hurricane insurance settlements, we changed
the way we define adjusted free cash flow to include proceeds from
insurance recoveries related to damaged and destroyed property and
equipment. We believe this change is appropriate as such cash proceeds
effectively partially offset payments for capital expenditures to
replace the property and equipment that was damaged or destroyed as a
result of the Hurricanes. We believe that our presentation of Adjusted
FCF provides useful information to our investors because this measure
can be used to gauge our ability to service debt and fund new investment
opportunities. Adjusted FCF should not be understood to represent our
ability to fund discretionary amounts, as we have various mandatory and
contractual obligations, including debt repayments, which are not
deducted to arrive at this amount. Investors should view Adjusted FCF as
a supplement to, and not a substitute for, U.S. GAAP measures of
liquidity included in our consolidated statements of cash flows. The
following table provides the reconciliation of our net cash provided by
operating activities to Adjusted FCF for the indicated periods:
| Three months ended | ||||||||||||
| March 31, | ||||||||||||
| 2019 | 2018 | |||||||||||
| in millions | ||||||||||||
| Net cash provided by operating activities | $ | 187.8 | $ | 163.2 | ||||||||
|
Cash payments (recoveries) for direct acquisition and disposition costs |
(1.3 | ) | 0.1 | |||||||||
| Expenses financed by an intermediary1 | 31.3 | 32.3 | ||||||||||
| Capital expenditures | (159.6 | ) | (188.2 | ) | ||||||||
| Recovery on damaged or destroyed property and equipment | 33.9 | — | ||||||||||
| Distributions to noncontrolling interest owners | — | — | ||||||||||
| Principal payments on amounts financed by vendors and intermediaries | (42.3 | ) | (51.1 | ) | ||||||||
| Principal payments on finance leases | (1.4 | ) | (2.0 | ) | ||||||||
| Adjusted FCF | $ | 48.4 | $ | (45.7 | ) | |||||||
| 1. |
For purposes of our condensed consolidated statements of cash flows, expenses, including value-added taxes, financed by an intermediary are treated as hypothetical operating cash outflows and hypothetical financing cash inflows when the expenses are incurred. When we pay the financing intermediary, we record financing cash outflows in our condensed consolidated statements of cash flows. For purposes of our Adjusted FCF definition, we add back the hypothetical operating cash outflow when these financed expenses are incurred and deduct the financing cash outflows when we pay the financing intermediary. |
|
ARPU per Customer Relationship
The following table provides ARPU per customer relationship for the
indicated periods:
| Three months ended March 31, | FX-Neutral1 | |||||||||||||||||
| 2019 | 2018 | % Change | % Change | |||||||||||||||
| Liberty Latin America2,3,4 | $ | 47.34 | $ | 51.65 | (8.3 | %) | (2.4 | %) | ||||||||||
| C&W2 | $ | 46.61 | $ | 45.39 | 2.7 | % | 3.6 | % | ||||||||||
| VTR/Cabletica4 | $ | 47.73 | $ | 55.65 | (14.2 | %) | (6.1 | %) | ||||||||||
| VTR | CLP | 33,029 | CLP | 33,508 | (1.4 | %) | (1.4 | %) | ||||||||||
| Cabletica | CRC | 22,267 | — |
N.M. |
N.M. |
|||||||||||||
|
N.M. – Not Meaningful. |
||||||||||||||||||
Mobile ARPU5
The following tables provide ARPU per mobile subscriber for the
indicated periods:
| Three months ended March 31, | FX-Neutral1 | |||||||||||||||||
| 2019 | 2018 | % Change | % Change | |||||||||||||||
| Liberty Latin America2 | $ | 14.32 | $ | 15.75 | (9.1 | %) | (7.5 | %) | ||||||||||
| C&W2 | $ | 13.86 | $ | 15.16 | (8.6 | %) | (8.0 | %) | ||||||||||
| VTR | $ | 20.07 | $ | 24.79 | (19.0 | %) | (10.3 | %) | ||||||||||
| 1. |
The FX-neutral change represents the percentage change on a year-over-year basis adjusted for FX impacts and is calculated by adjusting the current-year figures to reflect translation at the foreign currency rates used to translate the prior year amounts. |
|
| 2. |
In order to provide a more meaningful comparison of ARPU per customer relationship and ARPU per mobile subscriber, we have reflected any nonorganic adjustments in the customer and mobile subscriber figures used to calculate ARPU per customer relationship and ARPU per mobile subscriber for the three months ended March 31, 2018. |
|
| 3. |
Due to the uncertainties surrounding our Q1 2018 customer count in Puerto Rico as a result of the hurricanes, we have omitted Liberty Puerto Rico ARPU for each of the three months ended March 31, 2018 and 2019. For the three months ended March 31, 2019, Liberty Puerto Rico ARPU was $76.79. In order to provide a more meaningful comparison, Liberty Puerto Rico ARPU has been omitted from consolidated Liberty Latin America ARPU for each of the three months ended March 31, 2019 and 2018. Including Liberty Puerto Rico, consolidated Liberty Latin America ARPU was $51.08 for the three months ended March 31, 2019. |
|
| 4. |
The amounts for the three months ended March 31, 2018 do not include Cabletica. |
|
| 5. |
Mobile ARPU amounts are calculated excluding interconnect revenue. |
|
Additional Information | Borrowing Groups
Cable & Wireless Borrowing Group:
Effective December 31, 2018, C&W changed its basis of accounting from
International Financial Reporting Standards as issued by the
International Accounting Standards Board to generally accepted
accounting principles in the United States (U.S. GAAP).
Accordingly, financial information for the three months ended March 31,
2018 set forth in the table below has been revised from the prior-year
amounts to be in accordance with U.S. GAAP.
| Three months ended | ||||||||||||||
| March 31, |
Rebased |
|||||||||||||
| 2019 | 2018 | |||||||||||||
| in millions, except % amounts | ||||||||||||||
| Residential revenue: | ||||||||||||||
| Residential fixed revenue: | ||||||||||||||
| Subscription revenue: | ||||||||||||||
| Video | $ | 43.9 | $ | 42.7 | ||||||||||
| Broadband internet | 60.2 | 53.7 | ||||||||||||
| Fixed-line telephony | 24.3 | 26.9 | ||||||||||||
| Total subscription revenue | 128.4 | 123.3 | ||||||||||||
| Non-subscription revenue | 15.0 | 15.5 | ||||||||||||
| Total residential fixed revenue | 143.4 | 138.8 | 4.9 | % | ||||||||||
| Residential mobile revenue: | ||||||||||||||
| Service revenue | 135.0 | 155.1 | ||||||||||||
| Interconnect, equipment sales and other | 19.0 | 22.1 | ||||||||||||
| Total residential mobile revenue | 154.0 | 177.2 | (12.8 | %) | ||||||||||
| Total residential revenue | 297.4 | 316.0 | (5.1 | %) | ||||||||||
| B2B revenue: | ||||||||||||||
| Service revenue | 212.5 | 209.9 | ||||||||||||
| Subsea network revenue | 59.9 | 59.6 | ||||||||||||
| Total B2B revenue | 272.4 | 269.5 | 2.2 | % | ||||||||||
| Total | $ | 569.8 | $ | 585.5 | (1.7 | %) | ||||||||
| OCF | $ | 222.5 | $ | 229.1 | (2.0 | %) | ||||||||
| Operating income | $ | 52.3 | $ | 46.4 | ||||||||||
| Share-based compensation expense | 3.7 | 1.9 | ||||||||||||
| Depreciation and amortization | 150.6 | 154.1 | ||||||||||||
| Related-party fees and allocations | 7.9 | 6.6 | ||||||||||||
| Impairment, restructuring and other operating items, net | 8.0 | 20.1 | ||||||||||||
| OCF | 222.5 | 229.1 | ||||||||||||
| Noncontrolling interests’ share of OCF2 | 38.3 | 47.9 | ||||||||||||
| Proportionate OCF | $ | 184.2 | $ | 181.2 | ||||||||||
| OCF as a percentage of revenue | 39.0 | % | 39.1 | % | ||||||||||
| Operating income as a percentage of revenue | 9.2 | % | 7.9 | % | ||||||||||
| 1. |
Indicated growth rates are rebased for the estimated impacts |
| 2. |
The decrease in the noncontrolling interests’ share of OCF |
The following table details the borrowing currency and U.S. dollar
equivalent of the nominal amount outstanding of C&W’s third-party debt,
finance lease obligations and cash and cash equivalents (in millions):
| March 31, | December 31, | ||||||||||||||
| 2019 | 2018 | ||||||||||||||
|
Borrowing |
$ equivalent | ||||||||||||||
| Credit Facilities: | |||||||||||||||
| Term Loan Facility B-4 due 2026 (LIBOR + 3.25%) | $ | 1,875.0 | $ | 1,875.0 | $ | 1,875.0 | |||||||||
| Revolving Credit Facility due 2023 (LIBOR + 3.25%) | $ | 625.0 | 170.0 | — | |||||||||||
| Total Senior Secured Credit Facilities | 2,045.0 | 1,875.0 | |||||||||||||
| Senior Notes: | |||||||||||||||
| 8.625% GBP Unsecured Notes due 2019 | £ | — | — | 106.6 | |||||||||||
| 6.875% USD Unsecured Notes due 2022 | $ | 475.0 | 475.0 | 475.0 | |||||||||||
| 7.5% USD Unsecured Notes due 2026 | $ | 500.0 | 500.0 | 500.0 | |||||||||||
| 6.875% USD Unsecured Notes due 2027 | $ | 700.0 | 700.0 | 700.0 | |||||||||||
| Total Senior Unsecured Notes | 1,675.0 | 1,781.6 | |||||||||||||
| Other Regional Debt | 312.3 | 318.6 | |||||||||||||
| Vendor financing | 58.3 | 56.9 | |||||||||||||
| Finance lease obligations | 9.8 | 10.9 | |||||||||||||
| Total debt and finance lease obligations | 4,100.4 | 4,043.0 | |||||||||||||
| Discounts and deferred financing costs, net | (6.8 | ) | (5.4 | ) | |||||||||||
| Total carrying amount of debt and finance lease obligations | 4,093.6 | 4,037.6 | |||||||||||||
| Less: cash and cash equivalents | 324.6 | 416.2 | |||||||||||||
| Net carrying amount of debt and finance lease obligations | $ | 3,769.0 | $ | 3,621.4 | |||||||||||
| Exchange rate (£ to $) |
N.A. |
0.78 | |||||||||||||
-
At March 31, 2019, our total net debt was $3.8 billion, our
proportionate net debt was $3.7 billion, our Fully-swapped Borrowing
Cost was 6.1%, and the average tenor of our debt obligations
(excluding vendor financing) was approximately 6.4 years. -
Our portion of OCF, after deducting the noncontrolling interests’
share, (“Proportionate OCF”) was $184 million in Q1 2019 and $181
million for Q1 2018. -
Based on Q1 results, our Proportionate Net Leverage Ratio was 4.30x,
calculated in accordance with C&W’s Credit Agreement. At March 31,
2019, we had maximum undrawn commitments of $590 million, including
$135 million under our regional facilities. At March 31, 2019, 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 March 31, 2019 compliance reporting
requirements. -
During Q1 2019, we repaid in full the outstanding principal amount
under the 8.625% GBP Unsecured Notes due 2019 for total consideration
of £91 million ($120 million at the transaction date), including
accrued interest of £7 million ($9 million at the transaction date). -
In April 2019, we issued $300 million of additional 6.875% Unsecured
Notes due 2027 (increasing the total outstanding notional to $1
billion), as well as new $400 million 5.75% Senior Secured Notes due
2027. Proceeds of the issuances were used to repay (i) $265 million of
the 6.875% Unsecured Notes due 2022, (ii) $235 million of Term Loan
B-4 due 2026 and (iii) $170 million of Revolving Credit Facility
drawings related to the acquisition of UTS, and pay
transaction-related fees and expenses.
VTR Borrowing Group:
The following table reflects preliminary unaudited selected financial
results for three months ended March 31, 2019 and 2018 in accordance
with U.S. GAAP.
| Three months ended | ||||||||||||
| March 31, | ||||||||||||
| 2019 | 2018 | Change | ||||||||||
| CLP in billions, except % amounts | ||||||||||||
| Revenue | 162.8 | 158.9 | 2.5 | % | ||||||||
| OCF | 63.2 | 63.2 | — | % | ||||||||
| Operating income | 27.1 | 41.6 | ||||||||||
| Share-based compensation expense | 0.9 | 0.4 | ||||||||||
| Related-party fees and allocations | 2.2 | 1.8 | ||||||||||
| Depreciation | 26.0 | 17.9 | ||||||||||
| Impairment, restructuring and other operating items, net | 7.0 | 1.5 | ||||||||||
| OCF | 63.2 | 63.2 | ||||||||||
| OCF as a percentage of revenue | 38.8 | % | 39.8 | % | ||||||||
| Operating income as a percentage of revenue | 16.6 | % | 26.2 | % | ||||||||
The following table details the borrowing currency and Chilean peso
equivalent of the nominal amount outstanding of VTR’s third-party debt,
finance lease obligations and cash and cash equivalents:
| March 31, | December 31, | |||||||||||||
| 2019 | 2018 | |||||||||||||
|
Borrowing |
CLP equivalent in billions | |||||||||||||
| Credit Facilities: | ||||||||||||||
| Term Loan Facility B-1 due 20231 (ICP2+ 3.80%) |
CLP |
140,900 |
140.9 | 140.9 | ||||||||||
| Term Loan Facility B-2 due 2023 (7.000%) |
CLP |
33,100 |
33.1 | 33.1 | ||||||||||
| Revolving Credit Facility A due 2023 (TAB3+3.35%) |
CLP |
45,000 |
— | — | ||||||||||
| Revolving Credit Facility B due 20244 (LIBOR + 2.75%) | $ | 185.0 | — | — | ||||||||||
| Total Senior Secured Credit Facilities | 174.0 | 174.0 | ||||||||||||
| Senior Notes: | ||||||||||||||
| 6.875% USD Senior Notes due 2024 | $ | 1,260.0 | 856.4 | 874.4 | ||||||||||
| Vendor Financing | 69.6 | 69.9 | ||||||||||||
| Finance lease obligations | 0.3 | 0.3 | ||||||||||||
| Total third-party debt and finance lease obligations | 1,100.3 | 1,118.6 | ||||||||||||
| Deferred financing costs | (15.0 | ) | (15.9 | ) | ||||||||||
|
Total carrying amount of third-party debt and finance lease obligations |
1,085.3 | 1,102.7 | ||||||||||||
| Less: cash and cash equivalents | 74.6 | 77.9 | ||||||||||||
|
Net carrying amount of third-party debt and finance lease obligations |
1,010.7 | 1,024.8 | ||||||||||||
| Exchange rate (CLP to $) | 679.7 | 694.0 | ||||||||||||
| 1. |
Under the terms of the credit agreement, VTR is obligated to |
|
| 2. |
Índice de Cámara Promedio rate. |
|
| 3. |
Tasa Activa Bancaria rate. |
|
| 4. |
Includes a $1 million credit facility that matures on May 23, |
|
-
At March 31, 2019, our Fully-swapped Borrowing Cost was 6.8% and the
average tenor of debt (excluding vendor financing) was approximately
4.6 years. -
Based on our results for Q1 2019, and subject to the completion of the
corresponding compliance reporting requirements, our Consolidated Net
Leverage ratio was 3.65x, calculated in accordance with the indenture
governing the senior notes. -
At March 31, 2019, we had maximum undrawn commitments of $185 million
(CLP 126 billion) and CLP 45 billion. At March 31, 2019, the full
amount of unused borrowing capacity under our credit facilities was
available to be borrowed, both before and after completion of the
March 31, 2019 compliance reporting requirements. -
In March 2019, the commitment under the existing CLP revolving credit
facility was increased to CLP 45 billion.
Liberty Puerto Rico Borrowing Group:
The following table details the nominal amount outstanding of Liberty
Puerto Rico’s third-party debt and cash and cash equivalents:
| Facility amount | March 31, 2019 | December 31, 2018 | |||||||||||||
| in millions | |||||||||||||||
| First Lien Term Loan due 20221 (LIBOR + 3.50%) | $ | 850.0 | $ | 850.0 | $ | 850.0 | |||||||||
| Second Lien Term Loan due 20231 (LIBOR + 6.75%) | $ | 92.5 | 92.5 | 92.5 | |||||||||||
| Revolving Credit Facilitydue 2020 (LIBOR + 3.50%) | $ | 40.0 | — | — | |||||||||||
| Third-party debt before discounts and deferred financing costs | 942.5 | 942.5 | |||||||||||||
| Discounts and deferred financing costs | (8.2 | ) | (8.8 | ) | |||||||||||
| Total carrying amount of third-party debt | 934.3 | 933.7 | |||||||||||||
| Less: cash and cash equivalents | 55.2 | 19.8 | |||||||||||||
| Net carrying amount of third-party debt | $ | 879.1 | $ | 913.9 | |||||||||||
| 1. |
The First Lien Term Loan and the Second Lien Term Loan credit |
|
-
In April 2019, we repaid $10 million of the Second Lien Term Loan due
2023.
Cabletica Borrowing Group:
The following table details the borrowing currency and Costa Rican colón
equivalent of the nominal amount outstanding of Cabletica’s third-party
debt and cash and cash equivalents:
| March 31, | December 31, | ||||||||||||
| 2019 | 2018 | ||||||||||||
|
Borrowing |
CRC equivalent in billions | ||||||||||||
| Term Loan B-1 Facility due 20231 (LIBOR + 5.00%) | $ | 53.5 | 32.0 | 32.5 | |||||||||
| Term Loan B-2 Facility due 20231 (TBP2 + 6.00%) |
CRC |
43,177.4 |
43.2 | 43.2 | |||||||||
| Revolving Credit Facility due 2023 (LIBOR + 4.25%) | $ | 15.0 | — | — | |||||||||
| Third-party debt before discounts and deferred financing costs | 75.2 | 75.7 | |||||||||||
| Deferred financing costs | (2.3 | ) | (2.5 | ) | |||||||||
| Total carrying amount of third-party debt | 72.9 | 73.2 | |||||||||||
| Less: cash and cash equivalents | 10.4 | 5.1 | |||||||||||
| Net carrying amount of third-party debt | 62.5 | 68.1 | |||||||||||
| Exchange rate (CRC to $) | 599.2 | 606.6 | |||||||||||
| 1. |
Under the terms of the credit agreement, Cabletica is |
|
| 2. |
Tasa Básica Pasiva rate. |
|
Subscriber Tables
| Consolidated Operating Data — March 31, 2019 | ||||||||||||||||||||||||
|
Homes |
Two-way |
Fixed-line |
Total |
Internet |
Telephony |
Total |
Total Mobile |
|||||||||||||||||
| C&W: | ||||||||||||||||||||||||
| Panama | 550,100 | 550,100 | 179,900 | 91,000 | 117,900 | 128,600 | 337,500 | 1,590,500 | ||||||||||||||||
| Jamaica | 512,200 | 502,200 | 249,500 | 117,300 | 197,300 | 200,300 | 514,900 | 922,000 | ||||||||||||||||
| The Bahamas | 128,900 | 128,900 | 48,200 | 6,600 | 26,200 | 46,300 | 79,100 | 222,800 | ||||||||||||||||
| Trinidad and Tobago | 326,600 | 326,600 | 156,200 | 107,700 | 131,200 | 68,000 | 306,900 | — | ||||||||||||||||
| Barbados | 125,200 | 125,200 | 83,300 | 21,100 | 64,900 | 73,100 | 159,100 | 122,100 | ||||||||||||||||
| Other1 | 345,400 | 325,600 | 205,100 | 76,700 | 133,100 | 95,100 | 304,900 | 389,800 | ||||||||||||||||
| C&W Total | 1,988,400 | 1,958,600 | 922,200 | 420,400 | 670,600 | 611,400 | 1,702,400 | 3,247,200 | ||||||||||||||||
| VTR/Cabletica: | ||||||||||||||||||||||||
| VTR | 3,558,500 | 3,106,100 | 1,476,800 | 1,083,700 | 1,272,100 | 562,400 | 2,918,200 | 266,300 | ||||||||||||||||
| Cabletica2 | 586,200 | 580,300 | 240,500 | 199,000 | 174,300 | 21,000 | 394,300 | — | ||||||||||||||||
| Total VTR/Cabletica | 4,144,700 | 3,686,400 | 1,717,300 | 1,282,700 | 1,446,400 | 583,400 | 3,312,500 | 266,300 | ||||||||||||||||
| Liberty Puerto Rico | 1,093,800 | 1,093,800 | 387,800 | 221,100 | 335,500 | 203,700 | 760,300 | — | ||||||||||||||||
| Total | 7,226,900 | 6,738,800 | 3,027,300 | 1,924,200 | 2,452,500 | 1,398,500 | 5,775,200 | 3,513,500 | ||||||||||||||||
|
Organic Subscriber Variance Table — March 31, 2019 vs December 31, 2018 |
|||||||||||||||||||||||||
|
Organic Change Summary: |
Homes Passed |
Two-way Homes Passed |
Fixed-line |
Total Video |
Internet Subscribers |
Telephony Subscribers |
Total RGUs |
Total Mobile Subscribers3 |
|||||||||||||||||
| C&W: | |||||||||||||||||||||||||
| Panama | 4,100 | 4,100 | 4,100 | 4,600 | 5,900 | 4,700 | 15,200 | 20,600 | |||||||||||||||||
| Jamaica | — | — | 3,500 | (800 | ) | 6,700 | 3,600 | 9,500 | (13,900 | ) | |||||||||||||||
| The Bahamas | — | — | 900 | (300 | ) | (400 | ) | 700 | — | (1,500 | ) | ||||||||||||||
| Trinidad and Tobago | 2,100 | 2,100 | 100 | (100 | ) | 1,500 | 3,600 | 5,000 | — | ||||||||||||||||
| Barbados | 500 | 500 | (600 | ) | 500 | 900 | (800 | ) | 600 | — | |||||||||||||||
| Other1 | 200 | 200 | 300 | (1,200 | ) | 2,000 | 500 | 1,300 | (4,400 | ) | |||||||||||||||
| C&W Total | 6,900 | 6,900 | 8,300 | 2,700 | 16,600 | 12,300 | 31,600 | 800 | |||||||||||||||||
| VTR/Cabletica: | |||||||||||||||||||||||||
| VTR | 40,800 | 43,400 | 8,300 | 4,300 | 12,900 | (10,500 | ) | 6,700 | 10,000 | ||||||||||||||||
| Cabletica2 | 1,100 | 1,100 | 7,800 | 3,900 | 9,100 | — | 13,000 | — | |||||||||||||||||
| Total VTR/Cabletica | 41,900 | 44,500 | 16,100 | 8,200 | 22,000 | (10,500 | ) | 19,700 | 10,000 | ||||||||||||||||
| Liberty Puerto Rico | 5,400 | 5,400 | 11,700 | 4,000 | 11,500 | 6,200 | 21,700 | — | |||||||||||||||||
| Total Organic Change | 54,200 | 56,800 | 36,100 | 14,900 | 50,100 | 8,000 | 73,000 | 10,800 | |||||||||||||||||
|
Q1 2019 Adjustments: |
|||||||||||||||||||||||||
| C&W – Jamaica | 17,300 | 17,300 | — | — | — | — | — | — | |||||||||||||||||
| Net Adjustments | 17,300 | 17,300 | — | — | — | — | — | — | |||||||||||||||||
| Net Adds | 71,500 | 74,100 | 36,100 | 14,900 | 50,100 | 8,000 | 73,000 | 10,800 | |||||||||||||||||
| 1. |
C&W’s “Other” category excludes any subscriber data related to UTS, as their subscriber data is under initial phases of review following the March 31, 2019 effective acquisition. |
|
| 2. |
Subscriber information for Cabletica is preliminary and subject to adjustment until we have completed our review of such information and determined that it is presented in accordance with our policies. |
|
| 3. | Mobile subscribers are comprised of the following: |
| Mobile Subscribers | ||||||||||||||||||||
| Consolidated Operating Data | Q1 Organic Subscriber Variance | |||||||||||||||||||
| Prepaid | Postpaid | Total | Prepaid | Postpaid | Total | |||||||||||||||
| C&W: | ||||||||||||||||||||
| Panama | 1,446,200 | 144,300 | 1,590,500 | 22,000 | (1,400 | ) | 20,600 | |||||||||||||
| Jamaica | 903,800 | 18,200 | 922,000 | (14,800 | ) | 900 | (13,900 | ) | ||||||||||||
| The Bahamas | 198,000 | 24,800 | 222,800 | (2,000 | ) | 500 | (1,500 | ) | ||||||||||||
| Barbados | 94,600 | 27,500 | 122,100 | (100 | ) | 100 | — | |||||||||||||
| Other2 | 333,300 | 56,500 | 389,800 | (5,400 | ) | 1,000 | (4,400 | ) | ||||||||||||
| C&W Total | 2,975,900 | 271,300 | 3,247,200 | (300 | ) | 1,100 | 800 | |||||||||||||
| VTR | 7,500 | 258,800 | 266,300 | 700 | 9,300 | 10,000 | ||||||||||||||
| Total / Net Adds | 2,983,400 | 530,100 | 3,513,500 | 400 | 10,400 | 10,800 | ||||||||||||||
Glossary
ARPU – Average revenue per unit refers to the average monthly
subscription revenue (subscription revenue excludes interconnect, mobile
handset sales and late fees) per average customer relationship or mobile
subscriber, as applicable. ARPU per average customer relationship is
calculated by dividing the average monthly subscription revenue from
residential fixed and SOHO fixed services by the average of the opening
and closing balances for customer relationships for the indicated
period. ARPU per average mobile subscriber is calculated by dividing
mobile service revenue for the indicated period by the average of the
opening and closing balances for mobile subscribers for the indicated
period. Unless otherwise indicated, ARPU per customer relationship or
mobile subscriber is not adjusted for currency impacts. ARPU per RGU
refers to average monthly revenue per average RGU, which is calculated
by dividing the average monthly subscription revenue from residential
and SOHO services for the indicated period, by the average of the
opening and closing balances of the applicable RGUs for the period.
Unless otherwise noted, ARPU in this release is considered to be ARPU
per average customer relationship or mobile subscriber, as applicable.
Customer relationships, mobile subscribers and RGUs of entities acquired
during the period are normalized.
B2B – Business-to-business subscription revenue represents
revenue from services to certain SOHO subscribers (fixed and mobile).
B2B non-subscription revenue includes business broadband internet,
video, telephony, mobile and data services offered to medium to large
enterprises and, on a wholesale basis, to other operators.
Consolidated Net Leverage Ratio (VTR) – Defined in accordance
with VTR’s indenture for its senior notes, taking into account the ratio
of its outstanding indebtedness (including the impact of its swaps) less
its cash and cash equivalents to its annualized EBITDA from the most
recent two consecutive fiscal quarters.
Fixed-line Customer Relationships – The number of customers who
receive at least one of our video, internet or telephony services that
we count as RGUs, without regard to which or to how many services they
subscribe. To the extent that RGU counts include EBU adjustments, we
reflect corresponding adjustments to our customer relationship counts.
For further information regarding our EBU calculation, see Additional
General Notes below. Fixed-line customer relationships generally are
counted on a unique premises basis. Accordingly, if an individual
receives our services in two premises (e.g., a primary home and a
vacation home), that individual generally will count as two customer
relationships. We exclude mobile-only customers from customer
relationships.
Fully-swapped Borrowing Cost – Represents the weighted average
interest rate on our aggregate variable- and fixed-rate indebtedness
(excluding finance leases and including vendor financing obligations),
including the effects of derivative instruments, original issue premiums
or discounts and commitment fees, but excluding the impact of financing
costs.
Homes Passed – Homes, residential multiple dwelling units or
commercial units that can be connected to our networks without
materially extending the distribution plant, except for DTH homes.
Certain of our homes passed counts are based on census data that can
change based on either revisions to the data or from new census results.
We do not count homes passed for DTH.
Internet (Broadband) Subscriber – A home, residential multiple
dwelling unit or commercial unit that receives internet services over
our networks.
Leverage – Our gross and net leverage ratios are defined as total
debt and net debt to annualized OCF of the latest two quarters. Net debt
is defined as total debt less cash and cash equivalents. For purposes of
these calculations, debt is measured using swapped foreign currency
rates, consistent with the covenant calculation requirements of our
subsidiary debt agreements.
Mobile Subscribers – Our mobile subscriber count represents the
number of active subscriber identification module (“SIM”) cards in
service rather than services provided. For example, if a mobile
subscriber has both a data and voice plan on a smartphone this would
equate to one mobile subscriber. Alternatively, a subscriber who has a
voice and data plan for a mobile handset and a data plan for a laptop
(via a dongle) would be counted as two mobile subscribers. Customers who
do not pay a recurring monthly fee are excluded from our mobile
telephony subscriber counts after periods of inactivity ranging from 30
to 60 days, based on industry standards within the respective country.
In a number of countries, our mobile subscribers receive mobile services
pursuant to prepaid contracts.
NPS – Net promoter score.
OCF Margin – Calculated by dividing OCF by total revenue for the
applicable period.
Property and Equipment Addition Categories
-
Customer Premises Equipment: Includes capitalizable equipment and
labor, materials and other costs directly associated with the
installation of such CPE; -
New Build & Upgrade: Includes capitalizable costs of network
equipment, materials, labor and other costs directly associated with
entering a new service area and upgrading our existing network; -
Capacity: Includes capitalizable costs for network capacity required
for growth and services expansions from both existing and new
customers. This category covers Core and Access parts of the network
and includes, for example, fiber node splits, upstream/downstream
spectrum upgrades and optical equipment additions in our international
backbone connections; -
Baseline: Includes capitalizable costs of equipment, materials, labor
and other costs directly associated with maintaining and supporting
the business. Relates to areas such as network improvement, property
and facilities, technical sites, information technology systems and
fleet; and -
Product & Enablers: Discretionary capitalizable costs that include
investments (i) required to support, maintain, launch or innovate in
new customer products, and (ii) in infrastructure, which drive
operational efficiency over the long term.
Proportionate Net Leverage Ratio (C&W) – Calculated in
accordance with C&W’s Credit Agreement, taking into account the ratio of
outstanding indebtedness (subject to certain exclusions) less cash and
cash equivalents to EBITDA (subject to certain adjustments) for the last
two quarters annualized, with both indebtedness and EBITDA reduced
proportionately to remove any noncontrolling interests’ share of the C&W
group.
Revenue Generating Unit (“RGU”) – RGU is separately a
video subscriber, internet subscriber or telephony subscriber. A home,
residential multiple dwelling unit, or commercial unit may contain one
or more RGUs. For example, if a residential customer in Chile subscribed
to our video service, fixed-line telephony service and broadband
internet service, the customer would constitute three RGUs. RGUs are
generally counted on a unique premises basis such that a given premises
does not count as more than one RGU for any given service. On the other
hand, if an individual receives one of our services in two premises
(e.g., a primary home and a vacation home), that individual will count
as two RGUs for that service. Each bundled cable, internet or telephony
service is counted as a separate RGU regardless of the nature of any
bundling discount or promotion. Non-paying subscribers are counted as
subscribers during their free promotional service period. Some of these
subscribers may choose to disconnect after their free service period.
Services offered without charge on a long-term basis (e.g., VIP
subscribers or free service to employees) generally are not counted as
RGUs. We do not include subscriptions to mobile services in our
externally reported RGU counts. In this regard, our RGU counts exclude
our separately reported postpaid and prepaid mobile subscribers.
SOHO – Small office/home office customers.
Telephony Subscriber – A home, residential multiple dwelling unit
or commercial unit that receives voice services over our networks.
Telephony subscribers exclude mobile telephony subscribers.
Two-way Homes Passed – Homes passed by those sections of our
networks that are technologically capable of providing two-way services,
including video, internet and telephony services.
U.S. GAAP – Generally accepted accounting principles in the
United States.
Video Subscriber – A home, residential multiple dwelling unit or
commercial unit that receives our video service over our broadband
network primarily via a digital video signal while subscribing to any
recurring monthly service that requires the use of encryption-enabling
technology. Video subscribers that are not counted on an equivalent
billing unit (“EBU”) basis are generally counted on a unique premises
basis. For example, a subscriber with one or more set-top boxes that
receives our video service in one premises is generally counted as just
one subscriber.
Additional General Notes
Most of our operations provide telephony, broadband internet, data,
video or other B2B services. Certain of our B2B service revenue is
derived from SOHO customers that pay a premium price to receive enhanced
service levels along with video, internet or telephony services that are
the same or similar to the mass marketed products offered to our
residential subscribers. All mass marketed products provided to SOHO
customers, whether or not accompanied by enhanced service levels and/or
premium prices, are included in the respective RGU and customer counts
of our operations, with only those services provided at premium prices
considered to be “SOHO RGUs” or “SOHO customers.” To the extent our
existing customers upgrade from a residential product offering to a SOHO
product offering, the number of SOHO RGUs or SOHO customers will
increase, but there is no impact to our total RGU or customer counts.
With the exception of our B2B SOHO customers, we generally do not count
customers of B2B services as customers or RGUs for external reporting
purposes.
Certain of our residential and commercial RGUs are counted on an EBU
basis, including residential multiple dwelling units and commercial
establishments, such as bars, hotels, and hospitals, in Chile and Puerto
Rico. Our EBUs are generally calculated by dividing the bulk price
charged to accounts in an area by the most prevalent price charged to
non-bulk residential customers in that market for the comparable tier of
service. As such, we may experience variances in our EBU counts solely
as a result of changes in rates.
While we take appropriate steps to ensure that subscriber and homes
passed statistics are presented on a consistent and accurate basis at
any given balance sheet date, the variability from country to country in
(i) the nature and pricing of products and services, (ii) the
distribution platform, (iii) billing systems, (iv) bad debt collection
experience and (v) other factors add complexity to the subscriber
counting process. We periodically review our subscriber and homes passed
counting policies and underlying systems to improve the accuracy and
consistency of the data reported on a prospective basis. Accordingly, we
may from time to time make appropriate adjustments to our subscriber and
homes passed statistics based on those reviews.
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