Good morning, ladies and gentlemen, and thank you for standing by. Today’s call is being recorded. I will now turn the call over to Guillermo Ponce, CEO of VTR. Please go ahead.

Good morning and welcome to Liberty Latin America’s Full Year 2019 Investor Call. At this time, all participants are in a listen-mode only. 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 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. Additional information on factors or risks that could cause results to differ is available in Liberty Latin America’s most recently filed Form 10-K. 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 appendix 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, Guillermo, and welcome everybody to our full year results presentation. As always, I’m joined by my senior leadership team from across the region and I’ll get them involved as needed during the Q&A, following our prepared remarks. I’m going to start by taking you through our highlights and operating results for the year before finishing with a strategic update. Chris Noyes, our CFO, will then follow with a review of our financial performance and outlook for 2020. After that, we will get straight to your questions. As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com. Now starting on Slide 4 with our key highlights for the year, we generated record operational results in our fixed business with 283,000 RGU additions, which was 50% higher than in 2018 and driven by the strength of our leading broadband products. Our mobile momentum has improved significantly as well thanks to new propositions and a renewed focus from our teams. Compared to 2018, where we reported large subscriber losses, we added 124,000 mobile subscribers in 2019, which was a positive swing of 256,000. We also delivered our financial guidance for the year and I’m happy to say that, and this included our OCF, our P&E to revenue ratio and adjusted free cash flow. Our strong adjusted free cash flow performance of $223 million comfortably beat the increased target we had set halfway through the year. Chris will give you more details later. We continued to expand and strengthen our fixed and mobile networks with nearly 0.5 million new or upgraded homes, and our LTE coverage moved above 90%. Importantly, we continued to invest but with a disciplined view on returns, which helped improve our CapEx to sales ratio in 2019.…

Thank you, Balan. I will begin on Slide 12 and summarize our financial results. Starting with the upper left, we reported Q4 revenue of $975 million and 2019 revenue of $3.87 billion. These results reflect rebased growth of 3% for Q4 and 2% for 2019 as subscriber momentum and improved B2B traction are fueling top line advancements. Moving to OCF, we posted $409 million or 2% rebased declined for Q4 and $1.54 billion or 4% rebased growth for the full year. Our Q4 rebased performance was adversely impacted by $64 million insurance recovery benefit realized in Q4 2018. P&E additions totaled $722 million or 19% of revenue for 2019, including $229 million or 24% of revenue for Q4. The relatively higher spend in Q4 includes $16 million of restoration costs related to Hurricane Dorian in The Bahamas. Moving to the bottom right, we generated $103 million of adjusted free cash flow in Q4, bringing our 2019 total to $223 million and comfortably beating our guidance for the year. Our strong Q4 result was supported by favorable trade working capital movements, including robust collections within Cable & Wireless at the end of the year. In particular, we achieved some collections from larger B2B and government customers earlier than we had previously expected and thus we would expect to see some trade working capital unwind in our Q1 2020 cash flow. On Slide 13, we present our segment results and I’ll call out a few key figures, starting with C&W. A highlight for us was our Q4 revenue and OCF rebased growth of 3% and 13%, respectively, both of which were our best results since the acquisition of C&W in Q2 2016. With respect to our revenue growth, a strong result in B2B coupled with growth in residential fixed was only partially…

[Operator Instructions] Our first question comes from Michael Rollins from Citi. Please go ahead.

All right. Thanks for taking the question. When you look at the investment strategy for the company, have you sensitized the potential to accelerate broadband upgrades and deployments beyond the current plan, accelerating capital and trying to looking what that might bring for the company financially, versus the current pace and decision around that?

Hello, Michael. Thank you. Yes, that’s a question that we grapple with a lot. And we have looked at ways, where we can actually expand beyond the 500,000 that we’ve talked about on new builds. But it’s a little bit more complicated than just capital allocation requires moving a lot of contractors, the processes to support it. I think, we feel really good about the numbers that we have today and we are always going to look for opportunities to do more, because we think the payback is great, the IRSs are great, the story is great. And really, I think one of the secret sauce of our company is we know how to bill and we know how to sell. And so we are always looking for opportunities there.

Thanks very much.

Our next question comes from James Ratcliffe from Evercore. Please go ahead.

Great, thanks. Two, if I could. First of all, just on the – in terms of free cash flow weighting for 2020 towards the back half of the year. Is that just working capital or is there other things going on at the OCF or CapEx or PP&E additions line? And secondly, an area doesn’t get a lot of attention, but wireline voice adds were strong again in the quarter and you guys have been adding customers there. Is – can you talk about the strategy there and what’s driving the growth in the segment that I think most people are looking at as a declining segment overall? Thanks.

Sure. I’ll take the second question first, then I’ll ask Chris to jump in on the first one. On the voice add, if you recall, in 2018, towards the fourth quarter we were seeing some declines in the voice adds. We specifically targeted that and it’s part of the bundle strategy. As a single standalone product voices, not really a growing product. But as a bundled strategy, it’s thought to make sense. And so we’ve been quite creative on it. And the area where we’ve really focused on was in Chile, where we are really the leading fix voice provided. And Guillermo and his team has done a very nice job in both retention as well as, like I said, the bundling of proposition. Now, back to the first question I’m going to ask Chris to jump into.

Yes, James. The free cash flow phasing, certainly, it’s going to be much more weighted to the second half in particular, the Q4 similar to what you saw in 2019 with the exception that there will be working capital swing or unwind in the first quarter. So we would expect to see a negative working capital out of the gate. And also recall that in terms of our phasing, we do have a significant amount of our interest expense and sort of the first and third quarters of the year and I would expect that in 2020, relative to 2019 got our CapEx phasing the year won’t be as back end. Certainly today, it won’t be as back end weighted as it was in 2019. So the payment cycle will be a little bit different in terms of how it rolls through the free cash flow.

Great. Thank you.

Our next question comes from Soomit Datta from New Street Research. Please go ahead.

Hi, yes. A couple of questions on operations, please. One, just in Chile, could you give us an idea how things are on the streets, so to speak, given we’ve been hearing about the social unrest and kind of movement down there. How is that, if it is, impacting your business and how has that trended into the first quarter? And either because of that or just generally in terms of competitive dynamics. Do you think you can get the Chilean business back to the kind of growth rates, it was showing not so long ago? So kind of near sort of 4% or 5% perhaps? And then the second question is just on Panama. There were some sort of good numbers. I think the managed services business was performing well. I think the commentary continues to be around still negative competitive dynamics, unfortunately. Are we any closer do you think to those competitive dynamics easing? Are we kind of any closer to having clarity on the consolidation process from a regulatory perspective and do you know – what do you think your role could be in that process, please? Thank you.

Sure. I’ll ask both Guillermo and Inge to be ready to jump in here as well. On the second question, on the consolidation in Panama, we are actually quite excited about that. The mobile market there for players needs to go down. The government passed the law last year. It took a while for the regulated to come out with their specific rulings. They actually did one last year and it’s just been amended as a matter of fact this week and we think it’s very favorable to consolidation there. And I suspect something could happen in the next 12 to 24 months for sure. Now, back to Chile, I’ll ask Guillermo to jump in here, he can give you really good insights from the ground. So Guillermo?

Yes. Thank you, Balan. On the situation in the ground, after a very difficult end of the year, last year, mostly related to the disturbances to public order. We have seen a more quiet January and February. While some disturbances still occur in downtowns of a few cities in the country. We see no relevant effect in our businesses. Our stores are functioning normally today. Our network is functioning normally and we – what we’ve learned from the end of last year is to be prepared to number one, keep our employees fit; number two, keep our service continuity for our customers, and we all sort of prepared to face a good Q1. We see good demand in the market. The services are showing resilience, especially the broadband side. We are about to enter the back-to-school season in Chile. So we are confident that we are in good shape to face it.

Thank you, Guillermo. Inge you want to make some comments on Panama?

Yes. Hey, hello. Panama, I think, look, we’ve been operating it now really stringently. With B2B enterprise, we really have our hands on it and we’re really moving forward very strongly. Also, in the SMB segment, we made some very clear operating moves as we speak in the last month. B2C fixed with really, really fantastic growth in the last year and B2C mobile is a very challenging competitive environment, but I think we’ve come with very clear propositions and those propositions now bring us in a very competitive market. But still, we’re starting to see sustainable growth in the revenues now and that’s what we were there for. So we are very confident that we are on a good track also in Panama.

Thank you, Inge. Hopefully, that covers it. Next question?

[Operator Instructions] Our next question comes from Kevin Roe from Roe Equity Research. Please go ahead.

Thank you. A couple. On Puerto Rico at a high level, could you share your timing for integration of the AT&T Puerto Rico business, for instance, when we could start seeing a bundled product in the market between fixed broadband and mobile.

Sure. Hey, Kevin. So in Puerto Rico, and I’ll ask Naji to jump in here also and John Winter, our General Counsel and we think we can – this deal will still close in the second quarters as I’ve indicated earlier. And we are working closely with AT&T on how we can modify some of the products and really come up with a really nice bundled offering. And Naji’s leading that on our behalf on the ground. So Naji, maybe you want to make a comment here?

Yes, sure, Balan. As Balan said, we expect that transaction to close in the second quarter. And the way our plan laid out today is, we will likely start integrating our brands within six months, and within a period of 12 months, we have to have completed the rebranding. And as you know, we’ve said it as well publicly, part of our integration with AT&T and our carve-out includes a TSA, transitional service agreement, which will take approximately three years. As you go through three years, we will basically carve out the systems and the network from AT&T. So, we will likely start seeing synergies, as Balan mentioned in the beginning of the call, sometime within a year after we close the transaction. As to your question when we could see a bundled product, I think it’s just too early now to talk about that. But I would say, you can imagine that’s going to be part of our strategy as we move forward.

Thank you, Naji. And one quick one for Chris. The consolidated OCF number you reported for Q4, if you could just walk us through and quantify any one-time benefits in the Q4?

Yes, sure. And I can direct you to the press release, and in particular, there is a couple of pieces. In the OCF for Cable & Wireless, we did have about $12 million of reduction in programming costs related to a settlement that we reached with new agreements with programmers that cleared up some outstanding liabilities. And we also had $10 million in withholding tax benefits that we have with third-parties as the passage of time allowed us to take off the liability. But those are the benefits. On the opposite side, we had the impact of Hurricane Dorian in Q4 that impacted revenue and OCF. In OCF, it was a $4 million hit, and then bad debt in Cable & Wireless was up $6 million on a year-over-year basis as well. In addition, last year in the fourth quarter in Cable & Wireless, there was a $13 million benefit related to the insurance recovery. So, if you take those numbers together and offset it, they almost net out from a growth rate perspective in the fourth quarter. In addition, if you look across the group, and I think I made it clear in my remarks, also Puerto Rico’s growth rate was impacted by the $40 million – $49 million benefit in Q4 of 2018 from the insurance recovery. And in addition, in Chile, we did have some impact from the social unrest, where we had a $2 million credit in that business. So obviously, lots of different puts and takes. But in many cases, they kind of blend out when you look on a year-over-year basis.

Thank you, Chris.

Our next question comes from Mathieu Robilliard from Barclays. Please go ahead.

Yes, good morning. Thank you. I had a question about consolidation in the region. So obviously, one of your competitors in the region has announced that it is ready to sell, monetize partially entirely some of its assets. When you look at the portfolio, are there any geographies where you think it actually would make sense for you to look at? Or is this going to be a bit early considering you are in the process of buying AT&T Puerto Rico and from a balance sheet and give operational bandwidth, maybe to be purely? So, general comments about that would be super helpful. And then following up on Chile, so if I understand the answer you gave previously, the events had a little bit of an impact in Q4. But do I get it right that you expect therefore things to recover from your perspective in terms of top line dynamics for the rest of the year, assuming obviously the situation doesn’t deteriorate again? Thank you.

Sure. On the – you’re referring to the Telefonica announcement.

Correct.

And we don’t comment on M&A, but it would be silly for us to not always be hanging around the hoop for any potential opportunities inorganically in our region. And so, that’s probably all I should say about it. But we are very knowledgeable about all those assets. And they’re good assets in some areas. Some areas, there’s currency issues, but we will be very smart about this. And I think Chris and I have both said before, we are very disciplined on M&A activities. And one of the primary things that we look at is levered free cash flow per share, and it’s got to be accretive to us in any transaction. And I have also stated that our goal is really not to get bigger. Our goal is to create value. Just getting bigger is not that interesting to us. Creating value is what’s really interesting to us. Your second question on Chile. The Chile issue for us, mostly it’s around currency. It’s not operational. Guillermo indicated to you earlier our confidence in the business. Our operations are doing great. Our stores doing great. Our channels are fine. It’s really a currency issue for us. So – and we feel very confident in that economy and in that country and the prospects for it, both medium and long-term. And the currencies will settle again. The Central Bank in Chile has committed and they haven’t completed yet spending money to actually stabilize the currencies. Right now, when you see the currency movements, it’s a whole bunch of other things that’s driving it. It’s not the social unrest. Its price of oil. It’s the copper prices. It’s coronavirus in China. There’s a whole bunch of things that’s driving that. But the currencies will settle and I think will get better. But operationally, Chile – our business in Chile is fine. Thank you.

Thank you.

Our next question comes from Matthew Harrigan from Benchmark. Please go ahead.

Thank you. When you look at the FX-neutral ARPU per customer relationship in Puerto Rico, and more importantly, at Cable & Wireless, you’re actually growing in the 5% vicinity. I know you’re down 2 Zs at VTR. So it’s considerably ahead of your U.S. peers. And I know, to some extent, you’ve had a volume strategy in middle-income markets. But was there some sort of anomaly in Q4? Because on the surface, it seems like it’s incredibly encouraging. And I know you’re adding more RGUs than customer relationships. But when you look at the large installed base, it can’t just be that. And then secondly, putting on your old CTO hat from SCTE days, can you talk about how the advantages of having a quad-play, network capability with everything in-house are changing as mobile and fixed technology evolves? Thank you.

Sure. On the ARPU side, in Puerto Rico for sure, we started to take price increases as it becomes available to us. And in Chile, a lot of the movements are really a function of bundling. That’s really – on a per customer basis, that’s what you see. And – but I’ll tell you, and I’ve been also clear internally, our goal is – in this Company is to maintain our ARPU, stabilize ARPU, but really grow this business on volume. This is how we want – I want my managers to think about the problem. We want to grow this business based on volume. You’ve got to be very careful when you continue to take price increases because you just open an arbitrage opportunity for not only your traditional competitors, but future competitors as well. So we are trying to train our managers to be really focused on growing this business through the hard work of gaining volume, not the easy work of just taking price increases. So, I’ll leave it at that. Now, on the quad-play, we are seeing benefits of the quad-play, not as much as I’d like to in a lot of areas because primarily the mobile product is prepaid. I’ll tell you, in Puerto Rico, where this future transaction, the AT&T business is more than 70% postpaid, and you are going to see us be very creative in how we tie that postpaid business to our triple-play. But in the rest of our business, Betzalel, who is Chief Operating Officer, together with his team, is working really hard on trying to move that prepaid business into postpaid. We’re making some progress and we are getting very creative on looking at ways to make the prepaid business look a little bit more like postpaid in a hybrid way, and then attaching it to our triple-play. And that’s experimentation has started, and we are going to work on it even more so in 2020.

Thanks, Balan.

We have time for one final question. And our next question comes from Vitor Tomita from Goldman Sachs. Please go ahead.

Hi, good morning. This is actually Diego Aragao from Goldman. So, just a follow-up question on related to Chile. We have been seeing some companies deploying fiber and speeding up investments in that market to offer and make it broadband. So, I guess, my question is, how this could not only affect your broadband business in that market, but also drive some cord-cutting in there, given the growing number of OTT offers and the penetration of those servers? Thank you.

Okay. I’ll answer this question, and I’ll ask Guillermo to jump in, in a bit as well. On the fiber-to-the-home build, you’ve seen most of that being built in the C and D areas, areas that previously we also have neglected. But I’ll tell you, our strategy has changed, and we are now very aggressively building out into those areas. And the reason our strategy has changed is primarily driven by the fact that our engineering and operations team have come up with a way to build out at a cost point that is very attractive. And clearly, all these markets that previously we’ve kind of avoided, we’re now jumping into because we think the returns on it is going to be really positive. And we’ve proven that technology as well as those operation. And as a matter of fact, if you look back in the second and third quarter of last year, we made a press release that we are expanding our new-builds in Chile, primarily because we want to target those areas. So, yes, you’re right, there’s a bunch of smaller fiber-to-the-home guys coming up. We think those areas are great opportunities for us and will go head-to-head with them. And Guillermo and his team with the VTR brand – I’ll tell you, I personally went to some of those homes in some of those areas with Guillermo, and customers are saying, Boy, with the VTR brand and you guys coming in here, you are it, we want you guys. And so, we think it’s been really positive. Now, Guillermo, maybe you want to say a couple of things as well?

Yes. Thank you. Just to add the fact that we’ve been competing with – against fiber for a decade now, either the Telefonica fiber, the Intel fiber, the Claro fiber, now the newcomers’ fibers. And yet, with all this competition in the market, our consumer value proposition, tied with our brand, is proving to be the winning factor. VTR continues to be not only the leader in market share, but also a leader in share additions year-over-year.

And your second – thanks Guillermo. And your second question on code-cutting, code-cutting is happening everywhere in the world. But in our region specifically, it is not as – it hasn’t accelerated like it has elsewhere. The linear product and especially with our new launch of our new Hub TV, we think video is not a dying product. And while it’s not a super-growth product leader like in the old days, it is not a dying product. And we are very competitive on the video front. And we are managing it and mostly through the proposition itself, the technology and the product offering, but more importantly, the COGS on this product. This is a big focus for my operating team, as well as Chris and our finance team as well.

Okay, perfect. This is very helpful. Thank you for that. And just like a second question, if I may, related to 4G in the overall Caribbean region, as you are getting close to cover, let’s say, most of the parts in these regions, how is the real penetration of those services among your customers and how you think the business and the technology should trend in the next couple of years? Thank you.

Sure. 4G remains under-penetrated in most of our places. Our best penetration in 4G, of course, is in Chile. I think Bahamas – and certainly, Bahamas is pretty high. But the rest are still pretty low. In Jamaica, as an example, it’s under 50% still. We see huge opportunity for two reasons. One, with LTE, people consume more data and they get more entrenched with the product itself. And secondly, with that more data consumption, we see an improved ARPU as well. And it certainly makes it more interesting for customers who want a postpaid product. People that consume lots of data would rather have a postpaid product than a prepaid product. And our teams are working really hard on figuring out the right proposition to have people transition once they are big consumers of data. And that’s why we are really excited about LTE. My engineering team, Vivek and his folks have done a really good job in getting the coverage up. Now, our commercial teams are following on with that to see how fast we can transition customers to LTE.

That’s very helpful. Thank you.

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

Sure. Thank you, operator, and thank you everybody for joining this call. We are really excited about how we performed in 2019. We look forward to a good year in 2020. Chris’ guidance on 2020 is spot on. We think we can achieve that. We’re also really excited about the AT&T transaction. We will close that by middle of this year. And I think – like I said last year as well, I think we’re off to the races. So, thanks everybody and we’ll talk to you again in 90 days.

Ladies and gentlemen, this concludes Liberty Latin America’s Full Year 2019 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 materials.