Good morning, ladies and gentlemen, and thank you for standing by. Today’s call is being recorded. I’ll now turn the call over to Betzalel Kenigsztein, Chief Operating Officer of Liberty Latin America.

Good morning, and welcome to Liberty Latin America’s first quarter 2020 investor call. [Operator Instructions] 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’s remarks may include forward-looking statement, including the company’s expectation with respect to its outlook and future growth prospects and other information and statements that are not historical facts. Actual results may differ materially from those expressed or implied by these statements. Additional information or factors or risks that could cause results to differ is available in Liberty Latin America’s most recently filed Forms 10-K and Form 10-Q. Liberty Latin America disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement 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 and on our Investor Relations website. I would now like to turn the call over to our CEO, Mr. Balan Nair.

Thank you, Betzalel and welcome everybody to our first quarter results presentation. Firstly, I hope you and your families are safe and in good health during these challenging times. We decided to adjust our usual reporting format this quarter given the unprecedented uncertainties stemming from the COVID-19 pandemic. I hope you had the opportunity to read my letter to the shareholders published yesterday with our earnings release. In the letter, I wanted to share with you some of my thoughts on the situation and impact of our business as well as give you the confidence that we are focused, adapting and taking proactive measures to weather this storm. For today’s running order, I will start by briefly taking you through the highlights of our first quarter before adding some color to the areas I highlighted in my letter. Chris Noyes, our CFO, will then follow with a review of our financial performance, run through the COVID-19 impacts on our business in more detail and provide an overview of our capital structure management. After that, we will get straight to your questions. As always, I am joined by my senior leadership team from across the region and I will get them involved as needed during the Q&A following our prepared remarks. As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com. I will start on Slide 4 with our key highlights for the quarter. Following the positive momentum we reported in Q4, operationally, we had a strong start to the year in Q1 with 60,000 net adds, including a record performance in Cable & Wireless. Our financial performance was solid, growing revenue by 2% and OCF by 4% on a rebased basis with all of our reporting segments contributing. And…

Thanks, Balan, and to everyone on the call, I hope you and your families are safe and well. I will begin on Slide 11 and will quickly summarize our Q1 results. We delivered $931 million in revenue, representing 2% rebased growth. Our U.S. dollar reported revenue was 1% lower as the rebased growth combined with a modest $17 million contribution from M&A was more than offset by $47 million in net foreign currency impacts, principally the 21% average appreciation of the U.S. dollar against the Chilean peso. Importantly, each of our operating segments reported rebased revenue growth, as I will highlight on the next slide. Moving to OCF, we posted $364 million in Q1 2020, a similar reported result to Q1 2019. Consistent with our revenue trends, foreign currency weighed on our reported OCF result. Our consolidated rebased OCF growth rate was a solid 4%. P&E additions totaled $133 million in Q1 or 14% of revenue, reflecting a reduction as compared to $139 million or 15% of revenue last year. During the quarter, we continued investing in our footprint, as Balan pointed out. Finally, we reported negative $49 million of adjusted free cash flow in Q1. As I mentioned on our Q4 call in February, our Q1 2020 result was impacted by a trade working capital unwind, stemming in part from our strong Q4 collection activity. This compares to $48 million in Q1 2019. However, last year’s result was positively impacted by $67 million in insurance recovery proceeds. Moving to Slide 12 where we present our Q1 segment results, starting with C&W. We reported $589 million of revenue for 2% rebased quarterly growth. Our performance was driven by a 5% rebased increase in residential fixed and a 4% rebased increase in B2B, while residential mobile experienced a 6% rebased decline.…

Thank you. [Operator Instructions] We will take our first question from James Ratcliffe with Evercore ISI.

Good morning. Thanks for taking the question. I have two. First of all, on the cost savings plan, can you talk some more about on the operations side? Are these sort of short-term emergency measures or more sustainable cost reductions and how much of the pull-forward cost reduction plans we already planned on? And on the CapEx side, what sort of CapEx previously looking for, what won’t you be spending money on? And secondly, regarding the efforts to keep people connected during the pandemic, can you just talk about how that’s affecting customers so far, for example, how many customers would you have disconnected by now if you weren’t forbearing, any indication of customer activity thus far? Thank you.

Thanks, James. Sure. On the cost savings side, we have been quite prudent about it. It’s not something that’s extremely aggressive and we looked at both our CapEx and our OpEx. So an example, on the CapEx cuts would be something would be like towers. We have already expanded all of LTE migrations and we save, you know what, there is probably 10, 20 towers that we decided we probably don’t need to build this year and probably, in a year or two, we may go back to that. On the OpEx side, it’s usually a lot of the same things, we look at some of the third-party costs, consulting costs, we looked at some of the civil labor costs, so a number of things that we have taken out. And I would say a chunk of it, are costs that we would permanently pickup. So it’s quite a positive. On the pandemic itself, right now as you know as we pointed out both in Chris’ comments and mine that a lot of the customers that cannot afford to pay, we have decided to keep them on. We have moved them to a lower-speed product. So the disconnects in general dropped naturally, but I think that it probably would look about the same, maybe a tick higher if we had to disconnect people at this point.

Great. Thank you.

We will take our next question from Soomit Datta with New Street Research.

Thanks for the questions. A couple if possible please. Just on the – I guess we are all trying to gauge a sense as to where revenues are going, you were guiding to cash flow of $150 million and you are now sort of hoping for growth, which is a delta of maybe $150 million and then you are looking at savings from CapEx and OpEx of $150 million. So is it right to think that perhaps the worst case scenario here is a $300 million revenue hit or am I sort of trying to be a bit too cute about that thinking? And then just a follow-up on subsea cable, obviously, the volumes are going to be strong and you explained that in the presentation. Is that one of the businesses perhaps where you can monetize more reasonably the higher data volumes and does the pricing model allow for that? Thank you very much.

Sure, Soomit and maybe I will ask Chris to also think about an answer here on the first question. I think everybody is going to try to do the backward math to get to our revenue numbers. We have modeled quite a few things. And I think it’s not going to be that simple to model it back one because we really don’t know how it’s going to play out. We have – I will tell you internally, we have what we think is going to play out. We have a worst case condition. We have a super worse case condition and we stress test our balance sheet many different ways and Chris has done a really good job with that. But suffice to say that we are going to run this business for positive free cash flow. Chris and I have both committed to it. My full management team is committed to that. And I don’t think it would be a stretch for us to do that. On the subsea side, we are not taking price increases we are taking a lot more volume on subsea. A lot of customers need the additional capacity. And we’re not being greedy, nor are we trying to take advantage of the situation right now because people need that additional capacity. They need it fast. A lot of our wholesale customers are dependent on it. And it’s time for us to step up and provide that capacity for them. Chris, you want to give a little bit more color on the...

Yes. I would say just on the revenue component, I mean, a key variable, at least in the near term, is that the status of the lockdown and the number of the markets. They are starting – we’re starting to see them release. But that’s a key variable in terms of how revenue will play out over the next few months. So that’s one that’s obviously outside of our control. It’s with the government. But as that changes, then we’re able to – to the extent it was to extend longer, then we’re able to take more cost out of the business to deliver what Balan was speaking about around positive free cash flow profile.

Okay, thank you.

Our next question comes from Michael Rollins with Citi.

Hi, good morning. Thanks for taking the questions. I’m curious if you can kind of go back to the history that you’ve seen across your businesses, how does the unemployment rates in these different countries affect businesses and payments by those customers for your products, maybe just to get a sense of the sensitivity to the economy relative to the behavior? And then the second question I had is, with the cost cutting, is the cost cutting variable to the revenue? So if we’re through the crisis and your revenue is recovering, do those expenses come back, or is this simply accelerating some of the cost efficiencies you’ve been wanting to bring to the business, and you’ve articulated in the past such that the operating leverage on a recovery might look different than maybe over the past couple of years? Thanks.

Sure, Michael. On your first question on the unemployment rate, of course, unemployment will affect buying power, but this is how I would look at it. We – the business that’s probably more sensitive to that is our prepaid business. And prepaid, it’s not a huge part of our revenue stream, but it’s about 2/3 of our mobile revenue stream, which is about less than 1/4 of our total revenue. So there’s an impact on prepaid with unemployment. But the way I would look at it, if you look at our lines of business and what’s really exposed here. As Chris pointed out, for the first couple of months of the COVID experience, the big challenge for us is really the lockdown. The lockdowns put people at home, stores are closed, and that’s challenging. And by the way, that’s coming out. I would say that, as of today and in this coming week, we would probably have more than two-thirds of our stores coming back online, and that’s going to be a positive. So that’s one part. Then the second part as you look at, clearly, it’s a no-brainer that the hospitality business is going to be challenged. And given that we operate in a lot of these islands where the primary source of local revenue is the hospitality and tourism business, they’ll be somewhat challenged. And that’s B2B business, so we see it in two ways. The B2B business, which these hotels are our direct customers, they’ll be closed for a few months, and so that will have an impact and that by the way in our total B2B revenue, this is a small part of it. It’s not even 5% of our total B2B revenue. Now the second part of it is a lot of these hotels employ our customers, and that’s where your question around unemployment hits us. And most of these customers usually are prepaid customers. And so people are going to be – to conserve, they’ll probably spend less on prepaid. But things will come back. And I think it’s a combination of them losing their jobs and staying at home that they’ll put the pressure on prepaid initially. But as soon as the lockdowns are done when people start going out, they will want their mobile devices. They’ll want their services as well. And then you’ll start seeing the top-ups happening again. But clearly, our exposure is really in that – those niche areas. Your second question on the cost, yes, so there is two parts to costs, as you point out, the fixed cost and the variable cost. What we discussed earlier and what Chris and I talked about is the fixed costs. These are costs that we would take out. Now variable low costs like COGS like content costs and all that will naturally go down if activity drops, installation costs and all that will go down. That’s not in our $150 million. The $150 million are fixed costs.

And so does that mean on a recovery that you could see better incremental margin flow-through because you’re taking out fixed costs, and presumably, to what you’re describing, it may not come back?

Yes, you’re absolutely right, Michael. I see just a few things that I think is positive here. One, some of this cost goes out. Two, going forward, we are going even more deeper into self-installations. And there’s a whole bunch of labor costs and supply chain costs that also goes out as we come out of this. We’re now in the low single digits. So once we get into the double digits, into the high double digits, which is what my team is focused on, you’ll see when we come out of this, a lot of installed costs, which are mostly contracted, by the way, a lot of that comes out as well in the future. You see our movement to digitization, a lot of the channel cost is going to change. I’ll tell you, our call centers, as we pointed out, almost 90% of our call center agents are now working from home. The whole concept of a call center a year from now is going to be so different than what it was just 3-months ago. The world is changing around this. And the cost structures are going to change for that as well. And more than just the cost, it brings us more flexibility in the way we serve our customers when our agents can work from home. Now they can take a shift at 10 p.m. to 1 a.m. if they want to. It is a lot of things that change quite positively for a company like ours coming out of this.

Thanks very much.

Our next question comes from Matthew Harrigan with Benchmark.

Thank you. Two questions. Firstly, you have some aggressive deal-making DNA with your most well-known shareholder, to say the least. And even right now, I mean, you’re seeing dislocations of some of the blue-chip public companies, major holders of telecom assets in markets like Mexico. I mean, the stock prices are not even at the ‘98 Russian crisis level or 2008, I mean, you have to go back to the early 1990s or even the 1980s. And I think some of those companies are probably intent on some sort of restructuring process at some point in time. I know you’ve got a lot on your plate just dealing with indigenous issues in your markets, but do you still feel that you have latitude to be opportunistic given all the dislocations in the market? And then secondly, I know it’s a difficult question, but once you even get past COVID-19, people ask whether there’s going to be a Carnival Cruise Lines around. I mean, you could have issues with canal traffic in Panama and all that with different trade patterns. I mean, do you think there’s anything that – right now, I mean, clearly, in this market, you’re still seeing great demand for your products. But do you think there’s something that you could get 2 years or 3 years out, there’s a permanent dampener on the economic activity and some of these markets on account of the structural changes in the world economy, I mean, even with copper down in Chile as well. I know these are kind of quasi-theological questions, but I’d still love to get your feedback on it, if you don’t mind?

Sure, Matthew. There’s quite a few questions in there. Let me start with the M&A side. Of course, we are on the lookout for any dislocation and any opportunities. Ray Collins was closely with me – and I work closely with him. We are on the lookout, and we talk to everybody, and I think anybody that has a good idea and know that they can always reach out to us, and as you can imagine, many have. Now I would say, as we always say, to be a buyer, you have to have a seller. So it may be a dislocation right now, but maybe sellers may not think it’s dislocated yet. So time will tell. And I think any business that’s already struggling in month one of COVID-19 is probably not a business that we would be interested in anyway. We’re looking for good quality companies and in areas that we are interested in expanding our business. And so I think as time goes on, the pipeline will get richer and richer, but we’ll be very, very disciplined on this one. On the COVID-19, the impact, the larger macro, my team and I have spent time with adjacent industries. So I’ve talked to the folks at Carnival, my executives in Cable & Wireless, Inge, she’s been talking to all the hotels, Atlantis, Sandos. We get a good sense of what those guys are doing. And you probably saw the announcement from Carnival that they think, in August, some of their ships are going to be out – 8 of their ships are going to be out of Miami, Florida. By October, they’ll have some more ships. This is not going to be easy. It’s not going to be fast, but things are going to start coming back. There’s…

No. My questions are a little bit maybe too far extended, but I was just thinking about the very long-term economic impact versus the short-term impact. It sounds like you’re still very confident on the growth vector for the region. Thanks, Balan. I appreciate you taking the question.

Sure. Thanks, Matthew.

Our next question comes from Kevin Roe with Roe Equity Research.

Thank you. Good morning. Governments throughout your footprint have taken different approaches to maintaining mobile and fixed service for those impacted by COVID. You mentioned lifeline in your prepared remarks, payment concessions. It seems there could be further regulatory or legislative actions in certain of your markets. Could you discuss this topic generally and what markets you are monitoring for potential incremental regulatory or legislative actions?

Sure. John Winter, my General Counsel is with me here as well so maybe ask him to comment in a second. He’s done, by the way, a great job in managing all these relationships and expectations with governments. And I think we’ve been very clear to them that we’re here to support them. We’re here for the economy. We’re here for their citizens. And we understand what their interests are as well. I mean, they want to do what’s right for their communities, and we want to support them on that. Now the one exposure we may have is in Panama, which John is working on very closely. It’s public right now. They’ve been trying to make some changes in their laws. And we are working closely with the government to minimize the impact. And I think we’re getting there. So John, you want to make a comment?

Yes, sure. I mean, Panama, the government signed a law, their president did earlier this week, but we’re working closely with his advisers and the other members of the industry to make sure that the impact of that law balances like we do in all countries, both the need of the citizens in the country with also just the need to provide services. And we’re reminding the government that, where people can pay, they should be paying, and people need to be responsible during this time. And we’re doing that in Panama. Chile, we’re focused on. Bahamas and Jamaica, those are some of our primary markets. And Puerto Rico, we work with the government there, but that’s following the model that people have seen in the U.S. with the Keep America Connected Pledge. So – and then moving on, we will work with the governments to help them get out of this crisis themselves.

Great. Thanks, John. Yes, I think we feel really good about the relationships we’ve built and how cooperative a lot of these governments are with this because they realize we are one of the largest employers on their respective countries, and they also want to make sure that we stay healthy and keep all of our employees employed.

Thank you.

Our last question comes from Vitor Tomita with Goldman Sachs.

Hi, good morning all and thanks for taking our question. So our question is, given COVID-19, how do you see the competition’s response to this crisis in your market and especially in Panama and Jamaica, which were cited in the earnings release as markets where our competition has been affecting it at? Thank you.

Sure. I’ll ask Betzalel to also think through an answer for that. But so far, I think competition has been very rational across the board. You point at Jamaica. We compete with Digicel there. And Digicel, they’ve been very rational. They’re going through some of their debt issues right now. But they – I think they’ll get it all solved, and they’ve been actually a good competitor to us. In Panama, we’ve always had a challenge in Panama with 4 mobile operators, but even then right now, that’s really not the issue for us. It’s mostly the lockdown. That’s really the issue in Panama. Betzalel, do you have – would you like to provide some more insight?

Thank you, Balan. I think that, as you said, we don’t see any significant change in the competitive picture related to coverage. Maybe the other way around, we are cooperating with our competitors when we are discussing measures that – or cooperation to help the government in the different market. So I don’t see any significant change in the competitive landscape because of profit.

And I would add on the fixed side in both Jamaica and Panama, and you can see in our first quarter results, we continue to drive really nice growth in that area. So a key for us as we move forward here is continuing to push in that area.

Thanks, Chris. Is that our last question?

That will conclude today’s question-and-answer session. I’d like to turn the call back to Balan Nair for any additional or closing remarks.

Thank you, operator. So maybe I say a couple of things. One, it’s really unfortunate what we are all going through right now. And for a company to come out stronger out of this, you really need a few things. One, you need a management team with deep experience and knowledge about the business, a management team that’s on top of it but also deep in the weeds, making sure they know the numbers, they know what they need to do. Second, you need a company that has a strong balance sheet and a company that’s generating positive free cash flow. Third, you need a company that has a product that people want. They actually have a product that people need. And if you look at us right now, we have all three. I think – my management team is ready for this. We’ve been ready for this, and they’ve been doing an amazing job. And of course, I would say that. But I’ve worked with many teams, and the team is doing really well. And our balance sheet, I mean, Chris is on top of it. Our balance sheet is strong, and this team will deliver positive free cash flow. And the product that we have, it’s not only what people want. This is a product that’s necessary in this moment. Even when you’re running to trouble, you need your mobile phone. You need your broadband. You need the connectivity that we provide. You need the entertainment services that we provide. And that’s why we’ve had great sales in Puerto Rico, in Chile, in Jamaica. So I think we’re good. But on the flip side, we realize this is going to be tough. Chris pointed out the lockdowns have had an impact, but the lockdowns are going to end. And this team realizes, and we don’t take this lightly that this is a challenging period. But we’re ready for it, and we feel really confident, and we are really leaning into this business for now and the future. So thank you so much for your support, and have a great day.

Ladies and gentlemen, this concludes Liberty Latin America’s First Quarter 2020 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Latin America’s website at www.lla.com. There, you can also find a copy of today’s presentation material.