Liberty Latin America (LILA) Q2 FY26 earnings call: guidance and Q&A

How is LLA's Starlink partnership differentiated from the competitive threat it poses to US cable, and how will it evolve?

Management views Starlink as an add-on to bolster existing products and customer experience, not a wholesale replacement. They highlight unique market conditions, including spectrum availability and LLA's role as a major employer, suggesting markets are more ring-fenced than in other regions.

“The way we look at this relationship is that it's an add-on to our existing product line. And I think what's unique in our market compared to others is, one, of course, as you pointed out, the spectrum availability. Two, remember, we are literally one of the largest employers in many of the markets that we operate in.”

asked by Matthew Harrigan · answered by Balan Nair

Given the accelerating growth and new projects (Venezuela, El Salvador), does LLA have internal goals for high single-digit or low double-digit growth for Liberty Networks for the rest of the decade?

Management is bullish on Liberty Networks, confirming the analyst's instincts. They are doubling down on builds due to high cash conversion and operating contribution margins. They see it as a business to lean into more, providing better returns than the consumer business.

“I think your instincts are correct on that for sure, which is why we kind of doubled down on the number of builds... The reason we really like this and why it's also considered infrastructure is the cash conversion on this business is extremely high.”

asked by Matthew Harrigan · answered by Balan Nair

Any comments on the pace of execution for the remainder of the buyback program?

Management will be very opportunistic, disciplined, and smart about buybacks, noting that prior purchases have been 'in the money'. They currently see their common equity as undervalued and a better value than other M&A opportunities.

“We are going to be very opportunistic there. And as you can see, we really leaned in on it in the last month or so after the pref came out. And we'll continue to lean in into it. And -- but we are going to be very disciplined and smart about it.”

asked by Ernesto Gonzalez · answered by Balan Nair

Any updates on strategic initiatives for Puerto Rico, including a potential spin-off?

It's a work in progress to be constructive with debt counterparties, aiming for a resolution between now and next year. Spin-off is one option. Management reiterated that LLA is not funding Puerto Rico, which is self-funded by local operations, and the business is performing operationally.

“It's work in progress. We want to be very constructive with our counterparties on the debt side. And I think the resolution could come... we are not putting money into Puerto Rico. It is self-funded by the Puerto Rico operations.”

asked by Ernesto Gonzalez · answered by Balan Nair

Given recent postpaid improvements in Puerto Rico, what is the current competitive environment like, and how sustainable is the postpaid momentum?

Improvements stem from reengineered channels, new talent, network investments (new spectrum, same volume as T-Mobile), and innovative commercial offers (subsidized/unsubsidized). This led to reduced churn and improved sales, with port-in/port-out ratios looking very good against formidable competitors.

“Our port-in/port-out ratio right now is looking very good and so -- both against T-Mobile and against collateral. They're both formidable competitors, make no mistake, but we are holding our own right now with both of them.”

asked by Roberta Valadares Versiani · answered by Balan Nair

Can you discuss factors driving portfolio optimization/asset disposals and the long-term vision for the networks business, including potential consolidation?

Portfolio optimization focuses on rational markets with pro-business regulators, as exemplified by the Peru exit. For Liberty Networks, it has a much higher multiple due to high cash conversion. Management constantly considers how to bring clarity to its valuation, with opportunities for organic growth (new routes) and inorganic acquisitions. It's a business they are excited about.

“On the networks business, clearly, it has a much higher multiple on the sum of the parts. And it's not a high multiple just because it's infrastructure. It deserves a much higher multiple because of the cash conversion.”

asked by Roberta Valadares Versiani · answered by Balan Nair

Can you provide more color on the Amdocs partnership, especially the timing and phasing for the $250 million NPV?

The deal transforms legacy systems, processes, and leverages Amdocs' domain-specific AI models for telecoms. It captures cost savings, derisks legacy systems, and makes the company better. The transition begins in Q4 FY26, with immediate benefits and savings expected to start in Q4.

“The timing on it, is this in the fourth quarter is when we begin the transition... the immediate benefits and savings we will start seeing in the fourth quarter this year already.”

asked by David Lopez · answered by Balan Nair

Free cash flow generation was strong this quarter. How is the momentum expected for the rest of the year, and is there a timing issue, or is a strong Q4 still expected?

H1 was strong due to improved working capital phasing, generating cash earlier. While Q4 is seasonally strong, H2 free cash flow is expected to be less robust than last year's H2 due to comping against $81 million in weather derivative receipts in Q4 last year and expected amortization/payment of vendor financing.

“I did make a pointed remark that we would expect H2 in terms of free cash flow to be likely to be less robust than last year's second half, in part because if folks recall, we did receive $81 million in weather derivative receipts in cash in the fourth quarter last year.”

asked by David Lopez · answered by Christopher Noyes

Update on Jamaica's recovery post-Hurricane Melissa, particularly regarding the $100 million FCF 'albatross' and OIBDA run rate. Also, any existential concerns about weather and the availability of parametric insurance?

Jamaica's business operations are improving, with mobile market share and ARPU up. Fixed business is nearing 100% recovery, and B2B is largely back. They anticipate getting close to pre-hurricane levels by Q3. Parametric insurance is fully locked for the upcoming season at a cost-effective rate, with no issues foreseen.

“The actual business operations itself is improving, and we are getting very close to getting back to full strength... for upcoming season, we are fully locked in terms of the parametric.”

asked by Matthew Harrigan · answered by Balan Nair