Liberty Latin America Ltd.

Today's formal presentation materials can be found under the investor 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 and will be available under the investor section of our website. Today's remarks may include forward-looking statements, including the company's expectations with respect to its outlook, our recently announced pending transactions, and future growth prospects, and other information and statements that are not historical fact. Actual results may differ materially from those expressed or implied by these statements. For more information, please refer to the risk factors discussed in Liberty Latin America's most recently filed annual report on Form 10-K, and the quarterly report on Form 10Q, most recently filed with the SEC, along with the associated press release. Liberty Latin America disclaims any obligations to update any forward-looking statements or information to reflect any change in its expectations or in the conditions on which any such statement or information is based. In addition, On this call, we will refer to certain non-GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation, which is accessible under the Investors section of our website. I would now like to turn the call over to our CEO, Mr. Balan Nair.

Thank you, Matt, and welcome, everyone, to Liberty Latin America's third quarter results presentations. I'll begin with our group highlights and an overview of our operating results by reporting segments. Chris Noyes, our CFO, will then follow with a review of the company's financial performance. After that, we will get straight to your questions. As always, I am joined by my executive team from across the region, and I will invite them to contribute 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. Starting on slide four and our highlights for the third quarter, we had another strong operating quarter with 44,000 additions across internet and postpaid mobile subscribers. Over the past year, we have added close to a quarter of a million subscribers across these two products, which shows the strength of our commercial office. We are also continuing to invest in our networks with over 100,000 homes passed all upgraded in the quarter, and 285,000 year-to-date driven by activity in cable and wireless Caribbean and Panama. We reported adjusted OEBDA of $428 million in the quarter, representing a 10% year-over-year increase. This is our best rebase growth performance in two years, driven by double-digit growth in all of our segments apart from Puerto Rico, which we will cover in later slides. I want to emphasize that this significant growth primarily reflects structural efficiency improvements across our operations and not one-offs. We continue to allocate capital for our buyback program with $112 million between stock and convertible repurchases in the quarter. Through the end of Q3, we have bought back $111 million of our stock, $111 million of our stock and reduce the outstanding amount of our convertible bond due next year by 45% to $220 million. Finally, we are making progress with our key business integrations. In Panama, we are already seeing the benefits of synergies, driving the Q3 adjusted OBEDA growth rate of 25%. And in Puerto Rico, over 225,000 customers have now been migrated to our platform. We anticipate the process will now run into next year. However, completing a multi-year project of this scale within a few months of our initial target is still a very good outcome. I'm also excited to highlight the two accretive transactions we announced this week. Firstly, the acquisition of Spectrum and subscribers in Puerto Rico and the U.S. Virgin Islands, and secondly, the sale of mobile tower infrastructure across a number of our markets. I'll cover both deals at the end of my section. Turning to slide five, I'll begin our operating review with CNW Caribbean. The recovery in tourism we initially noticed in the first half of the year continued in Q3, despite it being the low season. bolstering performance in the segment. Starting on the left of the slide with our subscriber ads, we delivered another positive quarter with 20,000 ads across internet and mobile postpaid, with more than 50% coming from Jamaica. Our FMC strategy continues to drive performance in these two product lines, growing volume and improving our churn levels. Moving to the center of the slide and our revenue by product. The pie chart depicts the well-diversified nature of CNW Caribbean's revenue with B2B and consumer fixed, the largest elements followed by consumer mobile. Year-over-year rebates growth of 1% was driven by in-net and mobile postpaid subscriber growth, where we have achieved over 100,000 net ads in the last 12 months. Adjusting for the discontinuation of the transit business that we announced earlier this year, This rebase growth rate would have been nearly 300 basis points higher. Moving to slide six in our CNW Panama segment. Starting on the left of the slide, fixed momentum continued with almost 60,000 RGU net ads in the last 12 months across our service bundles. We have a strong network with 93% of our home staff, either via FTTH or HFC, and we are targeting 100 percent through the removal of all residual copper next year. In mobile, we reported our first quarter of postpaid losses in over three years. This was driven by conscious decision to reduce our push into lower-value segments of the market, where you can see the increased reported ARPU in Q3, as well as some impact from integration activities. Moving to the center of the slide in our revenue stream, which together drove 10 percent growth in the quarter. In Panama, our largest products by revenue are mobile and B2B. FIX is the smallest product area but one of the fastest growing. Positive trends from the first half of the year continued with both FIX and B2B recording strong revenue growth of 7% and 26% year over year respectively. Growth in FIX revenue was supported by higher volume from our successful commercial strategy focused on increasing penetration in our growing fiber-to-the-home network and across triple-play plants. In mobile, we saw reduced churn in both prepaid and postpaid. Finally, to our integration update in the lower right of the slide, we have made significant progress with the integration of Claro Panama's operation. Our network consolidation is close to complete with 99% of overlapping sites now. This is in addition to commercial progress, including optimization of sales channels, people, advertising, and sponsorships. These actions have driven significant synergies supporting our financial growth, despite integration costs peaking in the quarter. Next, to slide seven and Liberty Puerto Rico. Starting on the left of the slide, we delivered another very robust quarter of in-net additions. Continuous investments in our network and commercial activities have supported a 6% subscriber growth over the past year. Turning to mobile, we maintain a relatively stable post-paid base with 7,000 net losses across a total of 900,000 subscribers. We anticipate being able to grow share from our number two position in the market once migration activities have been completed. Our announced acquisition of Spectrum will further support these growth plans. Moving to the center of the slide and our highlights for the segment. We recorded 11% year-over-year fixed revenue growth in the quarter driven by gains across all fixed services. In mobile, we continued with our subsidy optimization strategy. targeting investments toward high-value customers in connection with the new iPhone 15 launch, having previously reduced subsidy levels in the first half of the year. Our sales volume was more than 50% higher than the iPhone 14 launch in the previous year. Finally, to our integration update. We have been progressing with our migration activities and have now moved approximately 225,000 customers to our new IT platform, which is fully operational and being used to sell prepaid and postpaid products to our customers. The migration itself has slowed down due to many factors, such as data quality, software incompatibility and number of Android devices, iPhone 15 launch complexity, and certain software issues in our IT stack. These have been solved, or we have a solution that will be delivered in the near term. We continue to monitor and manage these technologies as we scale the platform. However, there will be an impact to our costs under the TSA, third parties, contractors, and doubling of software licenses costs. In addition, we have invested in more equipment replacement, additional hiring to handle migrations, and additional staff in our call centers. These decisions result in one-time spend to ensure the best possible customer experience and to minimize churn from migration. We now anticipate integration activities will conclude by April 2024. As I mentioned earlier, we do not regard this as a material shift in the context of such a large and important project. Turning to slide eight in Liberty, Costa Rica. Starting on the left of the slide, we returned to internet subscriber growth in Q3, showing encouraging stabilization in our most competitive fixed market. In mobile, we reported our strongest quarter of the year in terms of net ads, with postpaid subscribers increasing by 27,000. FMC has been steadily growing, and we are now above 20% penetration in our fixed base. Moving to the center of the slide, consumer mobile remains our largest product with close to 60% share of revenue. This is followed by our consumer fixed business representing just over 30% and then a small but fast-growing B2B operations. Finally, our integration activities are now substantially complete with some smaller TSA-supported activities anticipated to be migrated early next year. Moving to slide nine in our Liberty Networks segment. Running through the revenue performance in the middle of the slide. Wholesale accounting for 70% of the segment's revenue delivered 8% rebate growth in Q3, driven by a significant customer we recognize on a cash basis and high affiliate capacity usage. Typically, the wholesale operations deliver steady low single digit top line growth mostly USD-denominated revenue, and has low capex requirements, which underpins high cash flow conversion. Our unique multi-ring infrastructure, as shown on the left of the slide, remains a differentiating factor in relation to the other networks in the region, and importantly, brings reliability. And the price, representing the remaining 30% of revenue, posted a 14% increase, driven by higher demand for connectivity solutions and IT as a service product. This is a high growth area for the group with significant opportunities across our markets, particularly in Latin America where we have a low market share and there is low penetration of services generally. Moving to the right of the slide and some highlights for the segments. Following a successful branding to Liberty Networks in Q2, we were recently awarded the Best Marketing Team accolade at the Global Carrier Awards. We also continue to deploy innovative solutions to support the resiliency and redundancy of our network. For example, we successfully deployed Tara, a Google Moonshot technology. Finally, to slide 10. and a summary of the transactions we have announced in the past week. Firstly, the acquisition of Spectrum and subscribers from DISH. Our commitment to Puerto Rico and the U.S. Virgin Islands is further reflected in this deal to acquire a combination of 100 megahertz of Spectrum and approximately 120,000 Boost subscribers. Upon completion, this transaction will provide us with valuable spectrum that will allow us to add more capacity, increase speeds, and further strengthen the leading 5G mobile network, as well as increase our scale in the prepaid market. Important to note that the purchase consideration will be spread across four annual payments from the date of closing, which we expect to take place next year. We expect funding for these payments to come from local sources. Secondly, we are pleased to have announced an agreement with a high-quality partner in Phoenix Towers that crystallizes the value of approximately $1,300 of our mobile tower infrastructure assets at a very attractive cash flow multiple. We will enter into long-term lease agreements with PTI upon close, which will enable us to continue delivering leading mobile services to our customers and support network expansion, including future 5G deployment plans across the Caribbean and Latin America. We anticipate using the transaction proceeds to reduce third-party debt and buy back shares. Overall, we feel very positive as we approach the end of the year, with many of our businesses delivering a good top line and adjusted OEBITDA growth. We remain focused on finalizing the integrations in Panama and Puerto Rico, which will further add to our momentum and contribute to cash flow growth in the coming years. Add the transactions I've just talked through, and we, as a management team, feel that the business has lots of opportunity for growth ahead. With that, I'll pass you over to Chris Noyes, our Chief Financial Officer, who will take you through our financial performance before we move on to your questions. Chris?

Thanks, Balan. I'll now take you through our financial performance in greater detail, starting on slide 12. As a reminder, we deconsolidated our Chilean business at the start of Q4 2022, so our reported results in 2023 do not include the operating results of VTR. Revenue was 1% higher on a rebase basis at $1.1 billion in the third quarter. We saw positive commercial traction across many of our markets with performance driven by double-digit growth in CNW Panama and Liberty Networks. As mentioned in prior quarters, CNW Caribbean reported revenue was impacted by a business decision to discontinue a legacy non-core B2B voice transit arrangement in Q1 2023, which was accounting for about $10 million of quarterly revenue and will have a similar impact in Q4. Adjusting for this, Q3 group revenue would have grown by 2% on a rebase basis year over year. Turning to adjusted EBITDA, we reported rebase growth of 10% to $428 million, our best quarterly result in two years, and reflecting structural efficiency improvements. Year-to-date rebase growth was 5% for the group, and with further growth anticipated in Q4, we are well positioned to deliver our target of mid-to-high single-digit rebase adjusted EBITDA growth for LLA this year. In the third column, our P&E additions were $187 million in Q3 or 17% of revenue. Nearly 60% of our quarterly spend was directed to CPE, new build, upgrade, and capacity. We continue to step up our new build and upgrade activities sequentially, reaching over 100,000 homes in the quarter. We are on track to deliver our guidance target of 16% of revenue for 2023. In the last chart, We delivered $33 million of adjusted FCF in the quarter. As in previous years, we anticipate that our adjusted free cash flow generation for the year will be substantially weighted to Q4, reflecting our seasonally strong financial performance and favorable working capital swings. Our adjusted FCF target remains at approximately $300 million before distribution to non-controlling interests. Several factors have materialized recently which add variability to the target this year, including the delay in timing of the Puerto Rico migration and dependency on large payments, particularly in Panama, due from B2G and B2B customers that could fall into next year. Slide 13 highlights our segment results. Beginning on the left with C&W Caribbean, we reported $361 million of revenue in Q3, reflecting 1% rebase growth, and $150 million of adjusted OIVDA, resulting in 14% rebase growth year on year. Adjusting for the transit impact in the prior year period, revenues would have been 4% higher on a rebase basis. Our primary driver of growth was through residential mobile with service revenue expansion led by our postpaid efforts, prepaid ARPU following price increases earlier in the year, and higher inbound roaming. Our strong adjusted EBITDA rebase growth was driven by lower direct costs, including programming, and improved operating leverage across many of our islands. We finished the quarter with a margin around 42%, more than 400 basis points higher than the prior year quarter. Moving to cable and wireless Panama, CWP contributed $190 million of revenue and $59 million of adjusted EBITDA in Q3, reflecting 10% rebase revenue growth and 25% rebase adjusted OIBADA growth. Rebase top line growth was driven by contract wins in our B2B business and an increase in residential fixed subscribers over the past year. Adjusted OIBADA grew strongly in Q3 as we captured value from the Colorado Panama integration. Turning to the middle column, Liberty Networks. We generated $113 million in revenue for 10% rebase growth and $64 million in adjusted OIBADA for an 11% rebase increase. Year-over-year rebase revenue growth followed robust performances in both our wholesale and enterprise operations, as Ballin highlighted. Adjusted EBITDA growth was driven by our revenue performance. Our adjusted EBITDA margin was just below 60% for the quarter, and our operating free cash flow margin stood at a very robust 45% of revenue. Second from the right, Liberty Puerto Rico. Q3 revenue was $351 million, reflecting a year-over-year rebase decline of 4%, and adjusted EBITDA of $116 million, reflecting a rebase decline of 11% as compared to Q3 2022. I'll cover this in more detail on the next slide. Wrapping up with Costa Rica on the far right, we delivered Q3 revenue of $135 million and adjusted EBITDA of $50 million, reflecting flat rebase revenue and rebased adjusted EBITDA growth of 21%. Year-over-year revenue was flat as subscriber-driven growth in mobile was offset by declines in fixed residential revenue from lower video RGUs and ARPU due to increased retention discounts and declines in higher ARPU plans. Adjusted EBITDA expanded significantly year-over-year, benefiting from the year-over-year strengthening of the Costa Rica cologne to the U.S. dollar, as we have certain costs denominated in U.S. dollars. Turning to slide 14 and the detailed review of our financial performance in Puerto Rico. Starting with revenue in the upper half of the slide, sequentially revenue was stable with mobile fixed and B2B growth mostly offset by a reduction in FCC funds effective in June this year. Year over year we reported a revenue decline of $15 million or 4%. Residential fixed continued to be strong with growth following rate increases and a negative prior year impact of credits issued to customers related to Hurricane Fiona. The increase was also driven by net broadband subscriber additions totaling 23,000 over the past 12 months. Residential mobile decreased year over year, driven by lower ARPU, including the impact of higher contract asset amortization and reduced roaming revenue due to a change in our agreement with AT&T this year. Other revenue was impacted by the reduction in FCC funds in June, as well as the prior year benefiting from increased revenue recognition in USVI. Moving to the lower half of the slide, adjusted EBITDA was lower sequentially due to an increase in both direct and operating costs. This includes higher equipment costs related to the iPhone 15 launch with strong sales balance mentioned and free handsets we have offered to customers as part of their migration. Labor costs also increased in part due to a one-off credit in Q2 related to the CARES Act. The year-over-year decline in adjusted EBITDA is mainly explained by lower revenue and an increase in OPEX. including the impact of higher professional services and IT-related costs related to the migration. Looking ahead to the coming quarters, we anticipate expenses will continue to run at a higher than normal level due to duplication of costs in our business during migration related to the TSA we have with AT&T. Moving to our usual balance sheet overview on slide 15, at the end of Q3 on a consolidated basis, we had $8 billion of total debt, $600 million of cash, and 900 million of availability under our revolving credit lines. Important to note that 96% of our debt stack is due in 2027 or beyond, and more than 95% has fixed interest rates. The long maturity and fixed interest features of our balance sheet coupled with significant liquidity result in a robust capital structure for the group. In terms of leverage, we have made good progress reducing levels here to date and ended Q3 at net leverage of 4.3 times. In the bottom right of the slide, we have repurchased about $182 million of our convert and $111 million of our equity year to date, including a combined $112 million in Q3. Importantly, we have retired about 45% of our convert this year, and with $220 million outstanding in due next July, we will have ample liquidity to manage redemption next year. Moving to the final slide and our closing remarks. Our consistent subscriber additions and B2B expansion helped deliver top-line rebase growth in the quarter. Operational leverage and synergy realization contributed to a strong quarter of growth, delivering a double-digit increase in adjusted EBITDA. Integration execution continues to be a primary focus for us. While there has been some movement in timelines, these projects are inherently highly complex, and we feel good overall about their execution and the benefits we will achieve once completed. During the quarter, we continue to invest in our leading networks while also repurchasing our equity and convertible notes at attractive prices. As noted by the commentary today, we have been active inorganically, which continues to be a key lever of value for us. We are positioned to have a strong Q4 and look forward to updating everyone in February. With that, operator, please open it up for questions.

Thank you. The question and answer session will be conducted electronically. If you would like to ask a question regarding the company's operations, please do so by pressing star followed by the digit one on your touch tone telephone. In order to accommodate everyone, we request that you ask only one question with one follow up if needed. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We'll pause for just a moment to give everyone an opportunity to signal for questions. Our first question goes to Michael Rollins of Citigroup. Michael, please go ahead. Your line is open.

Thanks, and good morning. First, just focusing on Puerto Rico, thanks for all the color and detail on the sequential and year-over-year changes. Can you provide a little more context in terms of how much the totality of integration and duplicative TSA costs may be weighing on the EBITDA in the quarter and for the year, and maybe just talk about the journey of how the business, as you get to April of next year and get fully done with the integration, how the financial performance of this segment should improve.

Sure. Thanks, Michael. You know, we had signaled a $70 million synergy for Puerto Rico, and we are still going to get that. It's kind of slightly delayed by perhaps a couple of quarters due to the delays in our migration. And so the way we think about it is there is definitely an impact. There's a few impacts here on the cash for us. Because of the delay in the migration, we are now not only paying AT&T for the services in the GSA, but we've also stood up our own platforms for the network and the ID stack, and we're already paying licenses for all that. So, we've kind of like doubled up in cost during this period. The second part is, as we looked at the migration, there were a few things that we, you know, over the last six months or so have come to the conclusion where there's just a whole bunch of handsets that's just not feasible for us to software upgrade. You know, these are handsets like Android devices that are on an Android pass that is really determined by AT&T, and those software pushes come out from AT&T. They don't come out from Samsung, as an example. So when a Samsung release comes out, it's on a different fork as the one with AT&T. And in some cases, we've just decided, you know what, it's going to be a terrible customer experience where we do the migration and suddenly the devices do not work. And so we've also taken the decision to start replacing proactively handsets during these migrations. So that's also going to hit us in a cost that we certainly didn't even budget for. So there's a number of things that, you know, you'll see impact this towards the end of the year and certainly bleed a little bit into the first quarter of next year and second quarter as well. But for the most part, next year will be less about handsets and stuff. And it's really about the doubling of costs on the TSA as well as our own internal licensing costs. Now, what happens after April? Two things. One, the TSA doesn't completely end at the end of the migration. We still have about a couple of months where we're still going to contract with AT&T for access to the air systems. The cost drops quite a bit, but it doesn't go to zero. And the reason we're going to do that is, of course, over a period after the migration, customers may call in regards to billings and a whole bunch of things that we still need access to prior records. And then I think by June, we'll be completely off. That's on the cost side. But from an operation standpoint, beginning in January, we are going to start exclusively selling all of our devices, all of our postpaid plans on our own stack. And that has big implications for us positively. We can start doing a lot of the FMC that we want to do. We can be a lot more nimble in the promotions that we're doing. That today, any changes in our offerings, we really need to coordinate with AT&T. So it gives us a lot of flexibility operationally and as well as a few months later, it'll take a lot of costs out of the system. Hopefully that was helpful.

Thank you, it was. And I'm looking back at slide 13 where you lay out the financial performance in the quarter by segment. And I'm looking at the stronger rebates oibida growth in CNW, in Panama, in Liberty Networks, in Costa Rica. Can you just give us a sense of how much of those oibida levels are considered run rates versus maybe any impact that might be a seasonal point of strength or a transitory source of strength to the extent that there were some like one-time benefits or some things that, you know, maybe costs that you avoided that need to come back at some point. So just trying to think about the durability of these new adjusted EBITDA levels that you're hitting in these other parts of your business.

Sure. So the EBITDA that we're hitting is actually kind of our new run rate. So we've already taken a lot of the synergies in Panama, in Costa Rica. And when you look at the OEBIDA in cable and wireless, it also included not necessarily synergies, but some serious cost reductions that are permanent. So what would that be? One would be programming. We restructured a lot of our content costs in cable and wireless that gave us some really good upside on the OEBIDA line. In addition to that, the one other area that gave us incremental low EBITDA as well is the increment in roaming. Our roaming has returned, not to the levels of pre-COVID, but people are starting to travel again. Cruise ships are out there, and so we're getting that upside as well. Now, you can say that roaming may go up and down over the years, but we think we've kind of hit a kind of a steady state there. It's never going to come back to pre-COVID levels, but it's certainly an expansion over last year. So between those two, you saw quite a bit of an expansion there. And in addition, the revenues, as Chris pointed out, the revenue growth is actually larger than what is shown here on a year-to-year basis because of some of the transit traffic that had zero margins in it. So that was helpful. And as a matter of fact, when I look at the overall LLA, there are a couple of things here that actually we showed a 1% increase at the LLA level. It should be close to like 3% because there's about a couple of one-offs from last year. Like FCC funding that we got last year that don't exist this year. So that went away. So that was quite a hit to us. So I think if you normalize for some of the things across LLA as well, we actually grew more than 1%. And that's why I feel really good about the Orbiter. Our contribution margin has expanded. And so you would normally look at it operating-wise, about a 3% grower in the top line and 10% grower on the bottom line, which is kind of a healthy way to run an operation.

Thank you very much.

Thank you. And the next question goes to Vitor Tomita of Goldman Sachs. Vitor, please go ahead. Your line is open.

Hello. Good morning, and thanks for taking our questions. Two questions from our side. The first one is also on the Puerto Rico integration. If you could give us a bit more color on how on how the decision was taken and why now the decision to extend the timeframe for Puerto Rico. In particular, if anything came up that you did not expect during the course of the integration and on how comfortable you are with completing the integration under the new timeframe. And our second question would be also on Puerto Rico, if you could give us an update on the competitive scenario, specifically for mobile, and on how you have been navigating it in terms of offerings and promotions since I recall this was a major topic in some of the previous conference calls and was still a bit of a difficult competitive environment. Thank you.

Sure. Thanks for those questions. So the decision to expand the migration was probably – we made that decision in the September timeframe, August-September timeframe. And at that point, we were still hoping that we could close some of it. And let me give you a little bit of color to this migration. The migration is made up of multiple migrations. So we have windows between us and AT&T where each window, and the window is a day, where we can actually push subscribers through. So it's really kind of like if you think of a regular basis, a port out. So it would be a port out from AT&T and a port into ourselves. So that's kind of like the migration. And we were anticipating to do about 10,000 a day in that migration, in each window. And over the period, we've discovered two things. One, there were a whole bunch of folks that we were going to migrate. We decided not to migrate because of the handset issues. You know, these guys, some were not on the right releases. And even with the iPhones, not just the Android, we have a feature, voice over Wi-Fi. When you get into your room, into your house, it goes over Wi-Fi. That specific feature on our stack required a software release of like 16.5 and above. And a lot of the iPhones, a lot of users had not migrated to that software release. So as we learned all these things, we said, okay, do we optimize for cost and we just ram everything through? or do we optimize for the experience of our customers? And we said, let's optimize for the experience of the customers, not only because we're such good guys or anything, but if it's a terrible experience, your chain is going to really mess you up. So we optimized for let's make this as smooth as possible. And we went back to AT&T and said we needed more windows. The second problem then hit us. Then we were getting through Thanksgiving. We were getting through Christmas holidays. And then, of course, there was the iPhone 15 launch in September, which AT&T shut down all the windows. Rightfully so. We didn't argue with them. We just said, okay, now we've lost 14 windows because of the iPhone 15. Then we've lost like a whole bunch of windows, almost 14 windows during the Thanksgiving period. We're going to lose like almost 18 windows during Christmas. And then when you do the math, you go, okay, let's methodically do this. We'll need to get into January and February. We think we're going to beat the April timeline, but, you know, we want to make sure that we have enough runway and get to the end of April and get this thing done methodically. But if you do the backward math in January, February, March, and April, and the number of windows we have, we're going to, like, easily close this. And our engineering teams, operating teams, a whole bunch of people are just working really hard on all facets of this, setting up a new network. turning up a whole new IT stack. It's quite unusual in a migration. Usually, you're migrating customers to your own billing system because you buy a company and it comes with a mobile, you know, core and everything. In this case, we didn't get that from AT&T. AT&T still supported us on the network. We had the radios. We owned the radios. We owned the towers. But we didn't have the core. And then we had to stand up a whole new mobile stack because we didn't have a mobile network in Puerto Rico. And the other complexity is we couldn't use any of our other IT stacks or core from the rest of our network because Puerto Rico is part of the United States and we have a whole bunch of U.S. regulations and U.S. privacy and security laws that we had to comply with that put us in a kind of a situation where our core had to be Puerto Rico and our redundancy in Miami, as an example. So we could not use any of our other This thing is really complex, but I tell you, I'm really proud of the team. I've been on many. I used to be a CTO, and you can talk to any of the CTOs in North America, Europe, or Asia. When you run one of these three IT migration projects, usually either you never get to where you're at, you know, you're missing it by a year, year and a half, or, you know, you abandon the project altogether. In this case, we're really going to come within months. And I tell the team, this is actually quite magical.

Our next question goes to Cesar Medina of Morgan Stanley. Cesar, please go ahead. Your line is open.

Thank you. The first question is regarding your guidance. You mentioned that there is now a little bit more variability on that target. Can you please maybe quantify what is the magnitude of potential variability and the direction of it over Rundler? And then second, regarding Panama, several moving parts in the sense that you have a very positive outlook for B2B. Is that sustainable? And then there is protests in the country plus you know, the fate of, you know, the third operator, DigiCell, on that country? Thank you.

Sure. I'll answer these questions, and then I'm going to ask Chris to jump in as well when I'm done. On the guidance, as Chris pointed out, you know, there's two things. One, this whole migration thing, we may end up spending more on handsets. You know, we're going to be very flexible on it. Right now, the reason we're not changing the guidance, we think we're going to hit it, but there's a few things, and we thought we ought to, like, You know, just give everybody a heads up. One, the equipment. And two, as Chris highlighted, in Panama, we have a very large B2B customer that at the end, you know, a lot of their bills get paid in the month of November and December. And we see light at the end of the tunnel, but we thought maybe we should highlight that. If that doesn't come in, it'll come in in January. It's just a timing issue. And Chris will give you more color on that. In Panama, the business itself, the B2B business, that's where a lot of it grows. Our B2B business there is about two-thirds monthly recurring and one-third non-recurring revenue. And a lot of the non-recurring revenue comes in in the third and fourth quarter. A lot of government contracts, large enterprise contracts. And we close those deals usually in the second half of the year, and then we ride it the following year. And every year, it's kind of like the same cadence that way. But we feel fairly confident. You know, it's about a $300 million business, the B2B. I don't know if you break that segment up, but I'll tell you. It's about a $300 million B2B business. It's about $100 million of NRR. And our sales team there led, you know, by actually one of our best salesperson. And that team delivers every year. So I'm not that worried about the variability of that business on the B2B segment. On the protests, you know, it is what it is. In Panama, it has impacted us a bit. Our shops have been closed. One of our key shops have been closed. A number of our other shops, the foot traffic have dropped quite a bit. And as you know, in these regions, a lot of our sales happens at the retail level and happens at the door-to-door level as well. So a lot of these protests have kind of cramped in a little bit. But I did check on our sales. You know, we go through our sales numbers every week. And sales, you know, while it's slowed down, our backlog installs have been increasing. So as soon as this protest is done, the installs gets out there and we should recover. So, you know, it's a temporary blip with the protest. I don't expect much of a hit to us financially. With that, I'll pass to Chris.

Yeah, maybe just a little bit of color as to, you know, the potential headwind we would see, in particular around the delay in the migration, there's kind of two key points. One is the inventory. Since we have both our new stack, which is getting up and running, and then we have the AT&T platform, we basically have double handset inventory than one would normally carry going into the holiday season. And then second, we have obviously monthly TSA costs and additional costs related to the migration. I mean, I would say just conceptually the headwind around that would be greater than sort of $30 million on the free cash flow side. But, you know, we are working hard, you know, driving our businesses across the group to, you know, continue to, you know, produce and, you know, strive to meet our target that we had given at the start of the year. Thanks, Chris.

Thank you. Very careful, gentlemen. Thank you very much.

Sorry, we've missed that.

Thank you. Our next question goes to Submit Data of New Street Research. Submit. Please go ahead. The line is open.

Hi, Bala and Chris. Thanks for the call. Yeah, a couple, please. And then also, I don't think we got an answer on the Puerto Rico mobile competition. I'd be interested if you could step back on that. That was a previous question. First of all, just thinking about free cash flow looking into next year, I think, Balan, you mentioned the 70 million of synergies in Puerto Rico is still intact. But as we look forward, should we think about those synergies layering in from here as well as some of the kind of extra costs we've seen at the moment falling away. So is the uplift kind of 70 million plus a little bit more? And then secondly, as well, kind of looping into the same theme, how much of the synergies are now coming through in Panama? So how much more can we think about coming in from that market as well? Just trying to get a feel for what sort of cash flow uplift we can think about on a run rate basis once this integration process is completed, please? That's the first question. I'll maybe come back in a second.

Sure. I'll come back to the PR mobile, but on the free cash flow, I don't anticipate us changing our synergy guidance on Puerto Rico. It would be about $70 million annualized. Clearly, next year, because of the bleed in cost, we'll probably not see the full $70 million next year. In Panama, the incremental synergies is not that significant anymore going forward. So you'll see the synergies that we've captured a lot this year. And next year, there's an incremental. I'm going to try the number like 5%. 5 million or so, probably won't exceed 10 million next year, over and above what we've captured this year. That's the number on the top of my head for my last reviews. On Puerto Rico MOBA, yes, that was the question. So, we actually feel pretty good about it. You know, there's two things that happened there. At the end of last year, when T-Mobile really went aggressive on their subsidies, I mean, they were offering iPhone 14s, AirPods. They were paying 600 million to, sorry, 600 bucks to buy our contract. You know, we had matched it to the end of last year. And, of course, Chris and I were not very happy with the free cash flow implications of matching that. So in the first half of this year, we kind of slowed down the subsidies. And subsequently, you can see that our net assets came flat. It's just right flat, just slightly south, but kind of noise. So you can say it's just flat. And then what happened in the second half of this year is we did a number of changes in our executive team in Puerto Rico on the product side. And so we've been looking at it through a new lens. And with the iPhone 15, we've come back into the subsidy game quite aggressively, both on the iPhones as well as non-Apple devices as well. And my sense is next year, you're going to see postpaid do better. You're going to see prepaid do better as well. We just launched a new prepaid app. promotion that I think will capture attention. It's a four by 20 plan. You get four lines, 20 bucks each. It's very aggressive. And the reason we couldn't do some of these things before is we didn't have our own IT stack. So I did indicate earlier that in January, we'll have our own postpaid where we'll exclusively sell on our own postpaid stack. But on the prepaid side, we stood that up already. So as of last week, we can just do whatever promotions we want. And so we're going to get aggressive in the prepaid. And as you look at our mobile business and the lines that we've lost, most of it's on the prepaid side. So this will now show up the prepaid with the boost transaction with DISH, which we should close sometime next year. They'll give us more channels on the prepaid. So we feel like the prepaid will get back to a good place. And then on the post-paid side, we're back in the subsidy game. The returns are actually quite good on that. We've kind of stretched it in a way that I think works really well for us. So we'll get back into the capture business. And you should look at us in 24 and 25 after we have our own stack running on our own network that we will be the attacker in Puerto Rico. And that's our mobile play going forward.

Yeah, thank you very much. Just on the tower deal, that's a great deal, which has just been announced. Could you give any, you said it was a great free cash flow multiple, any kind of steer as to what the multiple will be, what sort of free cash flow will kind of fall out as a result of that transaction? And I just wondered, are there more towers to come or is there potentially sort of other infrastructure you're looking to monetize at this time as well? Thanks very much.

I'll answer the last question first. No, we're not looking at any other infrastructure to monetize at this point. Of course, you know, we will be very opportunistic, but that's not what we're looking at. This tower deal is, we kind of like bundled up a lot of the towers that we thought we should put in this. There isn't any more towers. What we thought we should transact, we've included in this whole cohort. And we feel really good about it. I'm glad you asked the question because the press release went out right before the call. Literally, we were closing the final points in the deal until like 5 this morning, 5.30, and then about 6 o'clock still getting some governance issues resolved. And that's why it was very late on the press release coming out. But we are really excited about it. You asked about the multiple. We agreed with the buyer that we wouldn't talk too much about the multiples. But you can imagine it's highly accretive. We're very, very happy with it. The headline price and is that the EBITDA? John, can I talk about the EBITDA numbers? No. Okay. Just checking my general counsel. Yeah, we probably won't say the EBITDA hit on it, but you can clearly imagine it's not that significant.

Great. Okay. Thank you.

Yeah, we're excited about it, Sumit. That TAO deal is a good one.

Thank you. And our next question goes to Matthew Harrigan of Benchmark. Matthew, please go ahead. Your line is open.

Thank you. Speaking of good ones, per megahertz POP price on the Spectrum transaction with DISH seems really good, especially for that quality of Spectrum. I know it would be a discount to the U.S., but if you take out the 120,000 mobile customers, you're also getting it. It looks like it was just a really good deal for you. Can you elaborate a little bit more on the pricing and the inputs? for Puerto Rico relative to the states? Thank you.

Sure. You know, Puerto Rico always trades in the auctions. There's a slight discount against mainland for a couple of reasons. One, the potential buyers there are limited. Two, it's kind of a captive market there. And so it's always traded at a slight discount because it's easy to build a lot more towers there as opposed to just relying on spectrum. Now, having said that, the team has done a tremendously good job. I think it's a win-win for both us and Dish on that. It's quite accretive for them, accretive for us. It's accretive for them because they don't have to build out in Puerto Rico. We are going to take on the build-out obligations in Puerto Rico. And so it saves them a lot of capex that they can focus in mainland. Our general counsel was at the SEC yesterday at the Justice Department and did a tremendous job explaining the rationale for the deal together with the executives from DISH. And so we feel positive about it. You know, I think it's a good deal for DISH. It's certainly a good one for us as well. It shows two things. One, our confidence in Puerto Rico. And secondly, T-Mobile is this huge, humongous company, 30 times our size, that we're going to go up head-to-head with them day in, day out. We are all in in Puerto Rico in mobile.

Great. Thanks, Paul.

Thank you. That will conclude today's question and answer session. I'd like to hand back to Balan Mair for any additional or closing remarks.

Thank you, operator. You can clearly see I am very happy. I'm very happy with our earnings results for this quarter. I think the growth that you see here, you know, it's really good. I think fourth quarter is looking pretty good as well. And then next year, as we go into next year, we'll go in with a base of EBITDA and revenue that I think we can build nicely on as well. The business is in good place. I know there will be a lot of concerns about Puerto Rico, and it's a phase. We'll get to the migrations. The network has stood up. It's running really well. The IT stacks have stood up. We need to finish the migration. We get off the cost. In a year, nobody will remember about the migration and all that. And this is fundamentally a really strong, good business. The fixed network is growing really well. Prepaid business is going to grow. Postpaid business, I think our plans are really good. The spectrum acquisition we just made. The prepaid business we just bought, I think we're going to put Puerto Rico in a good place. So between that and a good place, our CNW business is operating really well. Panama, on to bigger and better things. Costa Rica is doing really well. Liberty Networks is doing really well. I think we've got a good franchise here, and I'm really excited about it. So thank you so much for all your support, and have a great day.

Thank you, ladies and gentlemen. This concludes Liberty Latin America's third quarter 2023 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. Thank you all for joining. You may now disconnect your lines.