UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
| | | | | | | | | | | |
| ☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended | September 30, 2021March 31, 2022 |
OR
| | | | | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to |
Commission file number: 001-38335
Liberty Latin America Ltd.
(Exact name of Registrant as specified in its charter)
| | | | | | | | |
| Bermuda | | 98-1386359 |
| (State or Other Jurisdiction of Incorporation or Organization) | | (I.R.S. Employer Identification No.) |
| |
| 2 Church Street, | | |
| Hamilton | | HM 11 |
| (Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (441) 295-5950 or (303) 925-6000
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of Each Class | Trading Symbols | Name of Each Exchange on Which Registered |
| Class A Common Shares, par value $0.01 per share | LILA | The NASDAQ Stock Market LLC |
| Class C Common Shares, par value $0.01 per share | LILAK | The NASDAQ Stock Market LLC |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | |
| Large Accelerated Filer | ☑ | Accelerated Filer | ☐ | Non-Accelerated Filer | ☐ |
| Smaller Reporting Company | ☐ | Emerging Growth Company | ☐ | | |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨
| | | | | | | | | | | |
| Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | Yes | ☐ | No þ |
The number of outstanding common shares of Liberty Latin America Ltd. as of October 31, 2021April 30, 2022 was: 46,971,58744,888,911 Class A; 1,930,907 Class B; and 182,938,026179,576,478 Class C.
LIBERTY LATIN AMERICA LTD.
TABLE OF CONTENTS
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Number |
| PART I - FINANCIAL INFORMATION | |
| Item 1. | FINANCIAL STATEMENTS | |
| Condensed Consolidated Balance Sheets as of September 30, 2021March 31, 2022 and December 31, 20202021 (unaudited) | |
| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,March 31, 2022 and 2021 and 2020 (unaudited) | |
| Condensed Consolidated Statements of Comprehensive Earnings (Loss)for the Three and Nine Months Ended September 30,March 31, 2022 and 2021 and 2020 (unaudited) | |
| Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30,March 31, 2022 and 2021 and 2020 (unaudited) | |
| Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30,March 31, 2022 and 2021 and 2020 (unaudited) | |
| Notes to Condensed Consolidated Financial Statements (unaudited) | |
| Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | |
| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | |
| Item 4. | CONTROLS AND PROCEDURES | |
| PART II - OTHER INFORMATION | |
| Item 1. | LEGAL PROCEEDINGS | |
| Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | |
| Item 6. | EXHIBITS | |
GLOSSARY OF DEFINED TERMS
Unless the context requires otherwise, references to Liberty Latin America, “we,” “our,” “our company” and “us” in this Quarterly Report on Form 10-Q (as defined below) may refer to Liberty Latin America Ltd. or collectively to Liberty Latin America Ltd. and its subsidiaries. We have used several other terms in this Quarterly Report on Form 10-Q, most of which are defined or explained below.
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20202021 Form 10-K | Annual Report on Form 10-K for the year ended December 31, 20202021 |
2026 C&W Senior Notes2020 Share Repurchase Program | $500The share repurchase program that was authorized by our Directors on March 16, 2020 that authorized us to repurchase from time to time up to $100 million principal amount 7.5% senior notes due October 15, 2026 issuedof our Class A and/or Class C common shares and expired in March 2022 |
| 2022 Share Repurchase Program | The share repurchase program that was authorized by our Directors on February 22, 2022 that authorizes us to repurchase from time to time up to $200 million of our Class A and/or Class C&W Senior Finance Limited common shares through December 2024 |
| 2026 SPV Credit Facility | $1.0 billion principal amount of LIBOR + 5.0% term loan facility due October 15, 2026 issued by LCPR Loan Financing (repaid during 2021) |
| 2027 C&W Senior Notes | $1.2 billion aggregate principal amount 6.875% senior notes due September 15, 2027 issued by C&W Senior Finance |
| 2027 C&W Senior Secured Notes | $550495 million aggregate principal amount issued at 99.195% of par, of 5.75% senior secured notes due September 7, 2027 issued by Sable |
| 2027 LPR Senior Secured Notes | $1.2 billion aggregate principal amount 6.75% senior secured notes due October 15, 2027 issued by LCPR Senior Secured Financing |
| 2027 LPR Senior Secured Notes Add-on | $90 million principal amount issued at 102.5% of par under the existing 2027 LPR Senior Secured Notes indenture |
| 2028 CWP Term Loan A | $275 million principal amount 4.25% term loan facility due January 18, 2028 issued by CWP |
| 2028 CWP Term Loan B | $160 million principal amount 4.25% term loan facility due January 18, 2028 issued by CWP |
| 2028 LPR Term Loan | $500620 million principal amount of LIBOR + 3.75% term loan facility due October 15, 2028 issued by LCPR Loan Financing |
| 2028 VTR Senior Notes | $550 million principal amount 6.375% senior notes due July 15, 2028 issued by VTR Finance N.V. |
| 2028 VTR Senior Secured Notes | $480 million principal amount of 5.125% senior secured notes due January 15, 2028 issued by VTR Comunicaciones SpA |
2029 VTR Senior Secured Notes | $410 million principal amount of 4.375% senior secured notes due April 15, 2029 issued by VTR Comunicaciones SpA |
| 2029 LPR Senior Secured Notes | $820 million principal amount of 5.125% senior secured notes due July 15, 2029 issued by LCPR Senior Secured Financing |
| 2029 VTR Senior Secured Notes | $410 million principal amount 4.375% senior secured notes due April 15, 2029 issued by VTR Comunicaciones SpA |
| Adjusted OIBDA | Operating income or loss before share-based compensation, depreciation and amortization, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items. Other operating items include (i) gains and losses on the disposition of long-lived assets, (ii) third-party costs directly associated with successful and unsuccessful acquisitions and dispositions, including legal, advisory and due diligence fees, as applicable, and (iii) other acquisition-related items, such as gains and losses on the settlement of contingent consideration. |
| Adjusted Term SOFR | SOFR U.S. dollar denominated loans adjusted as follows: (i) 0.11448% for a one-month interest period, (ii) 0.26161% for a three-month interest period and (iii) 0.42826% for a six-month interest period |
| AGRECU | Asociación Gremial de Consumidores Y Usuarios de Chile |
| América Móvil | América Móvil S.A.B. de C.V. |
| Annual Report on Form 10-K | Annual Report on Form 10-K as filed with the SEC under the Exchange Act |
| ARPU | Average monthly subscription revenue per average fixed RGU or mobile subscriber, as applicable |
| ASU | Accounting Standards Update |
| AT&T | AT&T Inc. |
AT&T Acquisition | October 31, 2020 acquisition of all of the outstanding shares of the AT&T Acquired Entities |
| AT&T Acquired Entities | Collectively, AT&T MobilityLiberty Mobile Inc., Liberty Mobile Puerto Rico Inc., AT&T Mobility Virgin Islands and Liberty Mobile USVI Inc. and Beach Holding Corporation |
AT&T TSA | Transition services agreement dated October 31, 2020 by and between AT&T and Leo Cable LP, a wholly-owned subsidiary of Liberty Latin America, for a period up to 36 months following the closing of the AT&T Acquisition |
| B2B | Business-to-business |
GLOSSARY OF DEFINED TERMS – (Continued)
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| Broadband VI, LLC Acquisition | December 31, 2021 acquisition of 96% of Broadband VI, LLC |
| C&W | Cable & Wireless Communications Limited and its subsidiaries |
| C&W Bahamas | The Bahamas Telecommunications Company Limited, a 49%-owned subsidiary of C&W that owns all of our operations in the Bahamas |
| C&W Caribbean and Networks | Reportable segment that includes all subsidiaries of C&W, excluding CWP that is a separate reportable segment |
| C&W Credit Facilities | Senior secured credit facilities of certain subsidiaries of C&W comprised of: (i) C&W Term Loan B-6 Facility; (ii) C&W Term Loan B-5 Facility; (iii) C&W Revolving Credit Facility; and (iv) C&W Regional Facilities |
| C&W Jamaica | Cable & Wireless Jamaica Limited, a 92%-owned subsidiary of C&W |
| C&W Notes | The senior and senior secured notes of C&W comprised of: (i) 2027 C&W Senior Secured Notes; and (ii) 2027 C&W Senior Notes |
| C&W Panama | Reportable segment for our operations in Panama |
| C&W Regional Facilities | Primarily comprised of credit facilities at CWP, C&W Jamaica and Columbus Communications Trinidad Limited and C&W Jamaica |
GLOSSARY OF DEFINED TERMS – (Continued)
| | | | | |
| C&W Revolving Credit Facility | $630 million LIBOR + 3.25% revolving credit facility, $50 million of which is due June 30, 2023 and $580 million due January 30, 2027, of C&W |
C&W Term Loan B-4 FacilitySenior Finance | $1,640 million principal amount term loan B-4 facilityC&W Senior Finance Limited, a wholly-owned subsidiary of C&W (repaid during 2020) |
| C&W Term Loan B-5 Facility | $1,510 million principal amount of LIBOR + 2.25% term loan B-5 facility due January 31, 2028 of C&W |
| C&W Term Loan B-6 Facility | $590 million principal amount of LIBOR + 3.00% term loan B-6 facility due October 15, 2029 of C&W |
| Cabletica | Cabletica, S.A., an indirectly 80%-owned subsidiary in Costa Rica, and its subsidiaries, including Telefónica-Costa Rica that was acquired in August 2021 |
Cabletica Credit Facilities | Senior secured credit facilities of Cabletica comprised of: (i) Cabletica Term Loan B-1 Facility; (ii) Cabletica Term Loan B-2 Facility; and (iii) Cabletica Revolving Credit Facility |
Cabletica Revolving Credit Facility | $15 million LIBOR + 4.25% revolving credit facility due August 1, 2024 of Cabletica |
| Cabletica Term Loan B-1 Facility | $277 million principal amount of LIBOR + 5.50% term loan facility, 50% of which is due February 1, 2024 and 50% due August 1, 2024, of Cabletica |
| Cabletica Term Loan B-2 Facility | CRC 80 billion principal amount of TBP + 6.75% term loan facility, 50% of which is due February 1, 2024 and 50% due August 1, 2024, of Cabletica |
| Capped Calls | Capped call option contracts issued in connection with the issuance of our Convertible Notes |
| Chile JV | Defined as the pending formation of a joint venture between Liberty Latin America and América Móvil that will be 50:50 owned by each investee |
| Chile JV Entities | Represents the entities that will be contributed to the Chile JV upon closing, consisting of Lila Chile Holding BV and its subsidiaries, which include VTR, and combine each of the Chile JV investee's Chilean operations (as further described in note 8 to the condensed consolidated financial statements) |
| Claro Panama | América Móvil's operations in Panama |
| Claro Panama Acquisition | Pending acquisition of Claro Panama |
Class C Right | Pro rata subscription rights granted to holders of our Class A, Class B and Class C common shares in connection with the Rights Offering |
| CLP | Chilean peso |
| CONADECUS | Corporación Nacional de Consumidores y Usuarios de Chile |
| Convertible Notes | $403 million principal amount of 2% convertible senior notes due July 15, 2024 issued by Liberty Latin America |
| COP | Colombian peso |
| Costa Rica | Reportable segment comprised of Cabletica and Telefónica-Costanica Costa Rica |
| Costa Rica Credit Facilities | Senior secured credit facilities of Cabletica comprised of: (i) Cabletica Term Loan B-1 Facility; (ii) Cabletica Term Loan B-2 Facility; and (iii) Cabletica Revolving Credit Facility |
| CPE | Customer premises equipment |
| CRC | Costa Rica colón |
| CWP | Cable & Wireless Panama, S.A., a 49%-owned subsidiary of C&W that owns most of our operations in Panama |
| CWP Credit Facilities | Credit facilities of CWP comprised of: (i) 2028 CWP Term Loan A, (ii) 2028 CWP Term Loan B and (iii) CWP Revolving Credit Facility |
GLOSSARY OF DEFINED TERMS – (Continued)
| | | | | |
| CWP Revolving Credit Facility | $20 million principal amount at Adjusted Term SOFR + 3.75% revolving credit facility due January 18, 2027 issued by CWP |
| Directors | Members of Liberty Latin America’s board of directors |
| EIP | Equipment installment-plan |
| EPS | Earnings or loss per share |
| Exchange Act | Securities Exchange Act of 1934, as amended |
| FASB | Financial Accounting Standards Board |
| FCC | United States Federal Communications Commission |
| FX | Foreign currency translation effects |
| JMD | Jamaican dollar |
| LCPR | Liberty CablevisionCommunications of Puerto Rico LLC |
| LCPR Loan Financing | LCPR Loan Financing LLC, a consolidated special purpose financing entity |
| LCPR Senior Secured Financing | LCPR Senior Secured Financing Designated Activity Company, a consolidated special purpose financing entity |
| Liberty Communications PR | Liberty Communications PR Holding LP and its subsidiaries, which include LCPR and, as of October 31, 2020, Liberty Mobile and its subsidiaries |
| Liberty Latin America Shares | Collectively, Class A, Class B and Class C common shares of Liberty Latin America |
GLOSSARY OF DEFINED TERMS – (Continued)
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| Liberty Mobile | Liberty Mobile Inc. and it subsidiaries |
| Liberty Puerto Rico | Reportable segment with operations in Puerto Rico and the U.S. Virgin Islands |
| LIBOR | London Inter-Bank Offered Rate |
LILAK | Class C common shares of Liberty Latin America |
| LPR Credit Facilities | Senior secured credit facilities of Liberty Puerto Rico comprised of: (i) LPR Revolving Credit Facility; and (ii) 2028 LPR Term Loan; and (iii) at December 31, 2020, 2026 SPV Credit FacilityLoan |
| LPR Revolving Credit Facility | $168173 million LIBOR + 3.5% revolving credit facility due March 15, 2027 of LCPR |
| LPR Senior Secured Notes | Senior secured notes of Liberty Puerto Rico comprised of: (i) 2029 LPR Senior Secured Notes; (ii) 2027 LPR Senior Secured Notes; and (iii) 2027 LPR Senior Secured Notes Add-on |
| MVNO | Mobile virtual network operator |
| Networks & LatAm | Business operations within our C&W Caribbean and Network segment |
| ODECU | La Organización de Consumidores y Usuarios de Chile |
| PSARs | Performance-based stock appreciation rights |
| PSUs | Performance-based restricted stock units |
| Quarterly Report on Form 10-Q | Quarterly Report on Form 10-Q as filed with the SEC under the Exchange Act |
| RGU | Revenue generating unit |
Rights Distribution | Authorized distribution of Class C Rights to acquire Class C common shares in the Rights Offering |
Rights Offering | September 2020 rights offering whereby we distributed 0.269 of a Class C Right for each share of Class A, Class B and Class C commons shares held as of the record date |
| RSUs | Restricted stock units |
Sable | Sable International Finance Limited, a wholly-owned subsidiary of C&W |
Sable Currency Swaps | U.S. dollar to the Jamaican dollar cross-currency swaps held by Sable |
| SARs | Stock appreciation rights |
| SEC | U.S. Securities and Exchange Commission |
| SERNAC | Servicio Nacional del Consumidor (the Chilean National Consumer Authority) |
Share Repurchase ProgramPrograms | The share repurchase program for up to $100 millionCollectively, the 2020 Share Repurchase Program and the 2022 Share Repurchase Program |
| SOFR | Reference rate based on secured overnight financing rate administered by the Federal Reserve Bank of our Class A and/or Class C common shares over two years that was authorized by our Directors on March 16, 2020New York |
| TAB | Tasa Activa Bancaria interest rate |
| TBP | Tasa Básica Pasiva interest rate |
| Telefónica | Telefónica, S.A., a telecommunications company with operations primarily in Europe and Latin America |
| Telefónica Acquisition Agreement | The agreement dated July 30, 2020 with Telefónica S.A. for our acquisition of their operations in Costa Rica |
Telefónica-Costanica Costa Rica | Telefónica de Costa Rica TC, S.A., an indirectly 80%-owned subsidiary in Costa Rica and it's subsidiary |
Telefónica-Costanica Costa Rica Acquisition | Acquisition of Telefónica S.A.’snica’s wireless operations in Costa Rica |
GLOSSARY OF DEFINED TERMS – (Continued)
| | | | | |
| U.K. | United Kingdom |
| U.S. | United States |
| U.S. GAAP | Generally accepted accounting principles in the United States |
| VAT | Value-added taxes |
| VTR | VTR Finance N.V. and its subsidiaries, a reportable segment |
| VTR Credit Facilities | Senior secured credit facilities of VTR comprised of: (i) VTR RCF – A; and (ii) VTR RCF – B; and (iii) at December 31, 2020, the VTR TLB-1 and VTR TLB-2 facilitiesB |
| VTR RCF – A | CLP 45 billion TAB + 3.35% revolving credit facility due June 15, 2026 of VTR |
| VTR RCF – B | $200 million LIBOR + 2.75% revolving credit facility due June 15, 2026 of VTR |
| VTR TLB-1 Facility | CLP 141 billion principal amount of ICP +3.8% term loan facility of VTR (repaid during 2021) |
GLOSSARY OF DEFINED TERMS – (Continued)
| | | | | |
| VTR TLB-2 Facility | CLP 33 billion principal amount of 7% term loan facility of VTR (repaid during 2021) |
| Weather Derivatives | Weather derivative contracts that provide insurance coverage for certain weather-related events |
LIBERTY LATIN AMERICA LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| | | September 30,
2021 | | December 31,
2020 | | March 31,
2022 | | December 31,
2021 |
| | March 31,
2022 | | December 31,
2021 | |
| | | in millions | | in millions |
| ASSETS | ASSETS | | ASSETS | |
| Current assets: | Current assets: | | Current assets: | |
| Cash and cash equivalents | Cash and cash equivalents | $ | 917.0 | | | $ | 894.2 | | Cash and cash equivalents | $ | 856.6 | | | $ | 956.7 | |
| Trade receivables, net of allowances of $80.5 million and $100.0 million, respectively | 527.5 | | | 560.7 | | |
| Trade receivables, net of allowances of $92.8 million and $80.3 million, respectively | | Trade receivables, net of allowances of $92.8 million and $80.3 million, respectively | 548.6 | | | 536.4 | |
| | Prepaid expenses | Prepaid expenses | 84.0 | | | 62.6 | | Prepaid expenses | 72.3 | | | 67.7 | |
| Current notes receivable, net of allowances of $15.9 million and $8.3 million, respectively | 113.5 | | | 77.5 | | |
| Current notes receivable, net of allowances of $20.6 million and $18.9 million, respectively | | Current notes receivable, net of allowances of $20.6 million and $18.9 million, respectively | 119.2 | | | 116.4 | |
| Other current assets, net | Other current assets, net | 382.7 | | | 356.9 | | Other current assets, net | 427.1 | | | 389.0 | |
| Total current assets | Total current assets | 2,024.7 | | | 1,951.9 | | Total current assets | 2,023.8 | | | 2,066.2 | |
| | Goodwill | Goodwill | 4,561.6 | | | 4,885.5 | | Goodwill | 3,927.6 | | | 3,948.0 | |
| Property and equipment, net | Property and equipment, net | 4,246.9 | | | 4,911.4 | | Property and equipment, net | 4,136.4 | | | 4,168.4 | |
| | Intangible assets not subject to amortization | | Intangible assets not subject to amortization | 1,592.8 | | | 1,592.4 | |
| Intangible assets subject to amortization, net | Intangible assets subject to amortization, net | 875.6 | | | 858.9 | | Intangible assets subject to amortization, net | 734.6 | | | 788.6 | |
| Intangible assets not subject to amortization | 1,592.4 | | | 1,465.6 | | |
| Assets held for sale | Assets held for sale | 1,542.2 | | | — | | Assets held for sale | 1,488.7 | | | 1,568.7 | |
| Other assets, net | Other assets, net | 1,153.2 | | | 1,156.7 | | Other assets, net | 1,326.9 | | | 1,253.7 | |
| Total assets | Total assets | $ | 15,996.6 | | | $ | 15,230.0 | | Total assets | $ | 15,230.8 | | | $ | 15,386.0 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
LIBERTY LATIN AMERICA LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS – (Continued)
(unaudited)
| | | September 30,
2021 | | December 31,
2020 | | March 31,
2022 | | December 31,
2021 |
| | March 31,
2022 | | December 31,
2021 | |
| | | in millions | | in millions |
| LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | | LIABILITIES AND EQUITY | |
| Current liabilities: | Current liabilities: | | Current liabilities: | |
| Accounts payable | Accounts payable | $ | 253.0 | | | $ | 351.7 | | Accounts payable | $ | 349.2 | | | $ | 398.0 | |
| Current portion of deferred revenue | Current portion of deferred revenue | 136.1 | | | 184.9 | | Current portion of deferred revenue | 160.7 | | | 148.0 | |
| Current portion of debt and finance lease obligations | Current portion of debt and finance lease obligations | 75.6 | | | 161.9 | | Current portion of debt and finance lease obligations | 117.8 | | | 106.3 | |
| Accrued capital expenditures | 46.4 | | | 73.6 | | |
| Accrued interest | Accrued interest | 107.3 | | | 132.3 | | Accrued interest | 88.7 | | | 113.0 | |
| | Accrued payroll and employee benefits | Accrued payroll and employee benefits | 89.3 | | | 107.5 | | Accrued payroll and employee benefits | 80.7 | | | 100.5 | |
| Derivative instruments | 44.8 | | | 90.2 | | |
| Current operating lease liabilities | Current operating lease liabilities | 78.9 | | | 63.2 | | Current operating lease liabilities | 78.8 | | | 82.0 | |
| Other accrued and current liabilities | Other accrued and current liabilities | 524.5 | | | 539.7 | | Other accrued and current liabilities | 484.1 | | | 566.7 | |
| Total current liabilities | Total current liabilities | 1,355.9 | | | 1,705.0 | | Total current liabilities | 1,360.0 | | | 1,514.5 | |
| Long-term debt and finance lease obligations | Long-term debt and finance lease obligations | 7,443.1 | | | 8,195.3 | | Long-term debt and finance lease obligations | 7,476.0 | | | 7,459.6 | |
| Deferred tax liabilities | Deferred tax liabilities | 698.1 | | | 619.9 | | Deferred tax liabilities | 699.2 | | | 696.3 | |
| Deferred revenue | Deferred revenue | 164.0 | | | 185.3 | | Deferred revenue | 143.6 | | | 152.6 | |
| Liabilities associated with assets held for sale | Liabilities associated with assets held for sale | 1,836.9 | | | — | | Liabilities associated with assets held for sale | 1,862.0 | | | 1,854.1 | |
| Other long-term liabilities | Other long-term liabilities | 774.2 | | | 1,080.8 | | Other long-term liabilities | 735.1 | | | 795.5 | |
| Total liabilities | Total liabilities | 12,272.2 | | | 11,786.3 | | Total liabilities | 12,275.9 | | | 12,472.6 | |
| | Commitments and contingencies | Commitments and contingencies | 0 | | 0 | Commitments and contingencies | 0 | | 0 |
| | Equity: | Equity: | | Equity: | |
| Liberty Latin America shareholders: | Liberty Latin America shareholders: | | Liberty Latin America shareholders: | |
| Class A, $0.01 par value; 500,000,000 shares authorized; 50,017,295 and 47,553,779 shares issued and outstanding, respectively, at September 30, 2021; 49,303,401 and 49,009,585 shares issued and outstanding, respectively, at December, 31, 2020 | 0.5 | | | 0.5 | | |
| Class B, $0.01 par value; 50,000,000 shares authorized; 1,930,907 shares issued and outstanding at September 30, 2021; 1,932,386 shares issued and outstanding at December 31, 2020 | — | | | — | | |
| Class C, $0.01 par value; 500,000,000 shares authorized; 183,395,888 and 182,722,730 shares issued and outstanding, respectively, at September 30, 2021; 181,786,924 and 181,113,766 shares issued and outstanding, respectively, at December 31, 2020 | 1.8 | | | 1.8 | | |
Class A, $0.01 par value; 500,000,000 shares authorized; 51,492,519 and 44,962,903 shares issued and outstanding, respectively, at March 31, 2022; 50,127,969 and 45,482,853 shares issued and outstanding, respectively, at December 31, 2021 | | Class A, $0.01 par value; 500,000,000 shares authorized; 51,492,519 and 44,962,903 shares issued and outstanding, respectively, at March 31, 2022; 50,127,969 and 45,482,853 shares issued and outstanding, respectively, at December 31, 2021 | 0.5 | | | 0.5 | |
| Class B, $0.01 par value; 50,000,000 shares authorized; 1,930,907 shares issued and outstanding at March 31, 2022; 1,930,907 shares issued and outstanding at December 31, 2021 | | Class B, $0.01 par value; 50,000,000 shares authorized; 1,930,907 shares issued and outstanding at March 31, 2022; 1,930,907 shares issued and outstanding at December 31, 2021 | — | | | — | |
| Class C, $0.01 par value; 500,000,000 shares authorized; 186,346,357 and 181,449,399 shares issued and outstanding, respectively, at March 31, 2022; 183,643,584 and 182,270,626 shares issued and outstanding, respectively, at December 31, 2021 | | Class C, $0.01 par value; 500,000,000 shares authorized; 186,346,357 and 181,449,399 shares issued and outstanding, respectively, at March 31, 2022; 183,643,584 and 182,270,626 shares issued and outstanding, respectively, at December 31, 2021 | 1.9 | | | 1.8 | |
| Undesignated preference shares, $0.01 par value; 50,000,000 shares authorized; nil shares issued and outstanding at each period | Undesignated preference shares, $0.01 par value; 50,000,000 shares authorized; nil shares issued and outstanding at each period | — | | | — | | Undesignated preference shares, $0.01 par value; 50,000,000 shares authorized; nil shares issued and outstanding at each period | — | | | — | |
| Treasury shares, at cost; 3,136,674 and 966,974 shares, respectively | (39.5) | | | (9.5) | | |
| Treasury shares, at cost; 11,426,574 and 6,018,074 shares, respectively | | Treasury shares, at cost; 11,426,574 and 6,018,074 shares, respectively | (130.0) | | | (74.0) | |
| Additional paid-in capital | Additional paid-in capital | 5,057.7 | | | 4,982.0 | | Additional paid-in capital | 5,113.2 | | | 5,075.3 | |
| Accumulated deficit | Accumulated deficit | (1,964.1) | | | (2,134.5) | | Accumulated deficit | (2,594.3) | | | (2,677.9) | |
| Accumulated other comprehensive loss, net of taxes | Accumulated other comprehensive loss, net of taxes | (100.2) | | | (125.6) | | Accumulated other comprehensive loss, net of taxes | (123.3) | | | (89.7) | |
| Total Liberty Latin America shareholders | Total Liberty Latin America shareholders | 2,956.2 | | | 2,714.7 | | Total Liberty Latin America shareholders | 2,268.0 | | | 2,236.0 | |
| Noncontrolling interests | Noncontrolling interests | 768.2 | | | 729.0 | | Noncontrolling interests | 686.9 | | | 677.4 | |
| Total equity | Total equity | 3,724.4 | | | 3,443.7 | | Total equity | 2,954.9 | | | 2,913.4 | |
| Total liabilities and equity | Total liabilities and equity | $ | 15,996.6 | | | $ | 15,230.0 | | Total liabilities and equity | $ | 15,230.8 | | | $ | 15,386.0 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
LIBERTY LATIN AMERICA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions, except per share amounts | | | in millions, except per share amounts |
| | Revenue | Revenue | $ | 1,192.0 | | | $ | 887.5 | | | $ | 3,519.9 | | | $ | 2,667.4 | | Revenue | | $ | 1,218.7 | | | $ | 1,165.2 | |
| Operating costs and expenses (exclusive of depreciation and amortization, shown separately below): | Operating costs and expenses (exclusive of depreciation and amortization, shown separately below): | | | | | | | | Operating costs and expenses (exclusive of depreciation and amortization, shown separately below): | | | | |
| Programming and other direct costs of services | Programming and other direct costs of services | 291.0 | | | 189.7 | | | 846.9 | | | 580.2 | | Programming and other direct costs of services | | 302.2 | | | 283.7 | |
| Other operating costs and expenses | Other operating costs and expenses | 488.0 | | | 365.6 | | | 1,402.5 | | | 1,105.8 | | Other operating costs and expenses | | 506.3 | | | 455.2 | |
| Depreciation and amortization | Depreciation and amortization | 253.5 | | | 231.6 | | | 753.4 | | | 661.5 | | Depreciation and amortization | | 214.1 | | | 243.1 | |
| Impairment, restructuring and other operating items, net | Impairment, restructuring and other operating items, net | 22.1 | | | 14.0 | | | 41.3 | | | 331.5 | | Impairment, restructuring and other operating items, net | | 7.8 | | | 2.2 | |
| | 1,054.6 | | | 800.9 | | | 3,044.1 | | | 2,679.0 | | | | 1,030.4 | | | 984.2 | |
Operating income (loss) | 137.4 | | | 86.6 | | | 475.8 | | | (11.6) | | |
Operating income | | Operating income | | 188.3 | | | 181.0 | |
Non-operating income (expense): | Non-operating income (expense): | | | | | | | | Non-operating income (expense): | | | | |
| Interest expense | Interest expense | (137.1) | | | (129.9) | | | (397.2) | | | (408.5) | | Interest expense | | (129.7) | | | (126.4) | |
| Realized and unrealized gains (losses) on derivative instruments, net | Realized and unrealized gains (losses) on derivative instruments, net | 292.0 | | | (78.1) | | | 464.2 | | | (239.7) | | Realized and unrealized gains (losses) on derivative instruments, net | | (33.7) | | | 114.9 | |
| Foreign currency transaction gains (losses), net | Foreign currency transaction gains (losses), net | (136.2) | | | 30.1 | | | (206.0) | | | (115.1) | | Foreign currency transaction gains (losses), net | | 96.6 | | | (25.4) | |
| Losses on debt extinguishment | Losses on debt extinguishment | (1.9) | | | (41.7) | | | (25.2) | | | (45.1) | | Losses on debt extinguishment | | — | | | (23.3) | |
| Other income (expense), net | (41.1) | | | 0.2 | | | (42.1) | | | 11.8 | | |
| Other expense, net | | Other expense, net | | (4.8) | | | (0.6) | |
| | (24.3) | | | (219.4) | | | (206.3) | | | (796.6) | | | | (71.6) | | | (60.8) | |
| Earnings (loss) before income taxes | 113.1 | | | (132.8) | | | 269.5 | | | (808.2) | | |
| Income tax benefit (expense) | (39.1) | | | 42.8 | | | (105.1) | | | 33.4 | | |
| Net earnings (loss) | 74.0 | | | (90.0) | | | 164.4 | | | (774.8) | | |
| Net loss attributable to noncontrolling interests | 4.2 | | | 5.4 | | | 6.0 | | | 116.5 | | |
| Net earnings (loss) attributable to Liberty Latin America shareholders | $ | 78.2 | | | $ | (84.6) | | | $ | 170.4 | | | $ | (658.3) | | |
Earnings before income taxes | | Earnings before income taxes | | 116.7 | | | 120.2 | |
| Income tax expense | | Income tax expense | | (23.5) | | | (29.5) | |
| Net earnings | | Net earnings | | 93.2 | | | 90.7 | |
| Net earnings attributable to noncontrolling interests | | Net earnings attributable to noncontrolling interests | | (9.6) | | | (1.6) | |
| Net earnings attributable to Liberty Latin America shareholders | | Net earnings attributable to Liberty Latin America shareholders | | $ | 83.6 | | | $ | 89.1 | |
| | Basic net earnings (loss) per share attributable to Liberty Latin America shareholders | $ | 0.34 | | | $ | (0.46) | | | $ | 0.73 | | | $ | (3.59) | | |
| Basic net earnings per share attributable to Liberty Latin America shareholders | | Basic net earnings per share attributable to Liberty Latin America shareholders | | $ | 0.37 | | | $ | 0.38 | |
| | Dilutive net earnings (loss) per share attributable to Liberty Latin America shareholders | $ | 0.33 | | | $ | (0.46) | | | $ | 0.73 | | | $ | (3.59) | | |
| Dilutive net earnings per share attributable to Liberty Latin America shareholders | | Dilutive net earnings per share attributable to Liberty Latin America shareholders | | $ | 0.36 | | | $ | 0.38 | |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
LIBERTY LATIN AMERICA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| | in millions |
| | | | | | | |
| Net earnings (loss) | $ | 74.0 | | | $ | (90.0) | | | $ | 164.4 | | | $ | (774.8) | |
| Other comprehensive earnings (loss), net of taxes: | | | | | | | |
| Foreign currency translation adjustments | 52.6 | | | (27.4) | | | 9.5 | | | (67.8) | |
| Reclassification adjustments included in net earnings (loss) | (0.2) | | | 0.6 | | | 2.4 | | | (2.5) | |
| Other | 9.9 | | | (0.5) | | | 13.1 | | | 1.1 | |
Other comprehensive earnings (loss) | 62.3 | | | (27.3) | | | 25.0 | | | (69.2) | |
Comprehensive earnings (loss) | 136.3 | | | (117.3) | | | 189.4 | | | (844.0) | |
Comprehensive loss attributable to noncontrolling interests | 4.0 | | | 5.5 | | | 6.4 | | | 117.3 | |
| Comprehensive earnings (loss) attributable to Liberty Latin America shareholders | $ | 140.3 | | | $ | (111.8) | | | $ | 195.8 | | | $ | (726.7) | |
| | | | | | | | | | | | | | | |
| | | | Three months ended March 31, |
| | | | | | 2022 | | 2021 |
| | | | | | in millions |
| | | | | | | |
| Net earnings | | | | | $ | 93.2 | | | $ | 90.7 | |
| Other comprehensive loss, net of taxes: | | | | | | | |
| Foreign currency translation adjustments | | | | | (22.5) | | | (26.0) | |
| Reclassification adjustments included in net earnings | | | | | (1.5) | | | 1.2 | |
| Other | | | | | (9.7) | | | 0.2 | |
Other comprehensive loss | | | | | (33.7) | | | (24.6) | |
Comprehensive earnings | | | | | 59.5 | | | 66.1 | |
Comprehensive earnings attributable to noncontrolling interests | | | | | (9.5) | | | (1.4) | |
| Comprehensive earnings attributable to Liberty Latin America shareholders | | | | | $ | 50.0 | | | $ | 64.7 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
LIBERTY LATIN AMERICA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liberty Latin America shareholders | | Non-controlling
interests | | Total equity |
| Common shares | | Treasury Stock | | Additional paid-in capital | | Accumulated deficit | | Accumulated
other
comprehensive loss, net of taxes | | Total Liberty Latin America shareholders |
| Class A | | Class B | | Class C |
| in millions |
| | | | | | | | | | | | | | | | | | | |
| Balance at July 1, 2020 | $ | 0.5 | | | $ | — | | | $ | 1.3 | | | $ | (9.5) | | | $ | 4,606.2 | | | $ | (2,021.0) | | | $ | (56.0) | | | $ | 2,521.5 | | | $ | 758.4 | | | $ | 3,279.9 | |
| Net loss | — | | | — | | | — | | | — | | | — | | | (84.6) | | | — | | | (84.6) | | | (5.4) | | | (90.0) | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | (27.2) | | | (27.2) | | | (0.1) | | | (27.3) | |
| Issuance of Liberty Latin America common shares, net | — | | | — | | | 0.5 | | | — | | | 347.2 | | | — | | | — | | | 347.7 | | | — | | | 347.7 | |
| Share-based compensation | — | | | — | | | — | | | — | | | 19.0 | | | — | | | — | | | 19.0 | | | — | | | 19.0 | |
| Other | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (1.6) | | | (1.6) | |
| Balance at September 30, 2020 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (9.5) | | | $ | 4,972.4 | | | $ | (2,105.6) | | | $ | (83.2) | | | $ | 2,776.4 | | | $ | 751.3 | | | $ | 3,527.7 | |
| | | | | | | | | | | | | | | | | | | |
| Balance at January 1, 2020 | $ | 0.5 | | | $ | — | | | $ | 1.3 | | | $ | — | | | $ | 4,569.9 | | | $ | (1,447.1) | | | $ | (14.8) | | | $ | 3,109.8 | | | $ | 870.1 | | | $ | 3,979.9 | |
| Accounting change (note 2) | — | | | — | | | — | | | — | | | — | | | (0.2) | | | — | | | (0.2) | | | 0.2 | | | — | |
| Balance at January 1, 2020, as adjusted for accounting change | 0.5 | | | — | | | 1.3 | | | — | | | 4,569.9 | | | (1,447.3) | | | (14.8) | | | 3,109.6 | | | 870.3 | | | 3,979.9 | |
| Net loss | — | | | — | | | — | | | — | | | — | | | (658.3) | | | — | | | (658.3) | | | (116.5) | | | (774.8) | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | (68.4) | | | (68.4) | | | (0.8) | | | (69.2) | |
| Repurchase of Liberty Latin America common shares | — | | | — | | | — | | | (9.5) | | | — | | | — | | | — | | | (9.5) | | | — | | | (9.5) | |
| Issuance of Liberty Latin America common shares, net | — | | | — | | | 0.5 | | | — | | | 347.2 | | | — | | | — | | | 347.7 | | | — | | | 347.7 | |
| Share-based compensation | — | | | — | | | — | | | — | | | 54.4 | | | — | | | — | | | 54.4 | | | — | | | 54.4 | |
| | | | | | | | | | | | | | | | | | | |
| Other | — | | | — | | | — | | | — | | | 0.9 | | | — | | | — | | | 0.9 | | | (1.7) | | | (0.8) | |
| Balance at September 30, 2020 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (9.5) | | | $ | 4,972.4 | | | $ | (2,105.6) | | | $ | (83.2) | | | $ | 2,776.4 | | | $ | 751.3 | | | $ | 3,527.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liberty Latin America shareholders | | Non-controlling
interests | | Total equity |
| Common shares | | Treasury Stock | | Additional paid-in capital | | Accumulated deficit | | Accumulated
other
comprehensive loss, net of taxes | | Total Liberty Latin America shareholders |
| Class A | | Class B | | Class C |
| in millions |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Balance at January 1, 2021 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (9.5) | | | $ | 4,982.0 | | | $ | (2,237.8) | | | $ | (125.6) | | | $ | 2,611.4 | | | $ | 729.0 | | | $ | 3,340.4 | |
| Net earnings | — | | | — | | | — | | | — | | | — | | | 89.1 | | | — | | | 89.1 | | | 1.6 | | | 90.7 | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | (24.4) | | | (24.4) | | | (0.2) | | | (24.6) | |
| Share-based compensation | — | | | — | | | — | | | — | | | 27.9 | | | — | | | — | | | 27.9 | | | — | | | 27.9 | |
| Other | — | | | — | | | — | | | — | | | (0.1) | | | — | | | — | | | (0.1) | | | — | | | (0.1) | |
| Balance at March 31, 2021 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (9.5) | | | $ | 5,009.8 | | | $ | (2,148.7) | | | $ | (150.0) | | | $ | 2,703.9 | | | $ | 730.4 | | | $ | 3,434.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | |
| | | | | |
| |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Balance at January 1, 2022 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (74.0) | | | $ | 5,075.3 | | | $ | (2,677.9) | | | $ | (89.7) | | | $ | 2,236.0 | | | $ | 677.4 | | | $ | 2,913.4 | |
| Net earnings | — | | | — | | | — | | | — | | | — | | | 83.6 | | | — | | | 83.6 | | | 9.6 | | | 93.2 | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | (33.6) | | | (33.6) | | | (0.1) | | | (33.7) | |
| Repurchase of Liberty Latin America common shares | — | | | — | | | | | (56.0) | | | — | | | — | | | — | | | (56.0) | | | — | | | (56.0) | |
| Share-based compensation | — | | | — | | | 0.1 | | | — | | | 37.9 | | | — | | | — | | | 38.0 | | | — | | | 38.0 | |
| Balance at March 31, 2022 | $ | 0.5 | | | $ | — | | | $ | 1.9 | | | $ | (130.0) | | | $ | 5,113.2 | | | $ | (2,594.3) | | | $ | (123.3) | | | $ | 2,268.0 | | | $ | 686.9 | | | $ | 2,954.9 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
LIBERTY LATIN AMERICA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – (Continued)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liberty Latin America shareholders | | Non-controlling
interests | | Total equity |
| Common shares | | Treasury Stock | | Additional paid-in capital | | Accumulated deficit | | Accumulated
other
comprehensive loss, net of taxes | | Total Liberty Latin America shareholders |
| Class A | | Class B | | Class C |
| in millions |
| | | | | | | | | | | | | | | | | | | |
| Balance at July 1, 2021 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (19.5) | | | $ | 5,032.5 | | | $ | (2,042.3) | | | $ | (162.3) | | | $ | 2,810.7 | | | $ | 725.3 | | | $ | 3,536.0 | |
| Net earnings | — | | | — | | | — | | | — | | | — | | | 78.2 | | | — | | | 78.2 | | | (4.2) | | | 74.0 | |
| Other comprehensive earnings | — | | | — | | | — | | | — | | | — | | | — | | | 62.1 | | | 62.1 | | | 0.2 | | | 62.3 | |
| Repurchase of Liberty Latin America common shares | — | | | — | | | — | | | (20.0) | | | — | | | — | | | — | | | (20.0) | | | — | | | (20.0) | |
| Distributions to noncontrolling interest owners | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Contribution from noncontrolling interest owner | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 46.9 | | | 46.9 | |
| Share-based compensation | — | | | — | | | — | | | — | | | 25.1 | | | — | | | — | | | 25.1 | | | — | | | 25.1 | |
| Other | — | | | — | | | — | | | — | | | 0.1 | | | — | | | — | | | 0.1 | | | — | | | 0.1 | |
| Balance at September 30, 2021 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (39.5) | | | $ | 5,057.7 | | | $ | (1,964.1) | | | $ | (100.2) | | | $ | 2,956.2 | | | $ | 768.2 | | | $ | 3,724.4 | |
| | | | | | | | | | | | | | | | | | | |
| Balance at January 1, 2021 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (9.5) | | | $ | 4,982.0 | | | $ | (2,134.5) | | | $ | (125.6) | | | $ | 2,714.7 | | | $ | 729.0 | | | $ | 3,443.7 | |
| Net earnings | — | | | — | | | — | | | — | | | — | | | 170.4 | | | — | | | 170.4 | | | (6.0) | | | 164.4 | |
| Other comprehensive earnings | — | | | — | | | — | | | — | | | — | | | — | | | 25.4 | | | 25.4 | | | (0.4) | | | 25.0 | |
| Repurchase of Liberty Latin America common shares | — | | | — | | | — | | | (30.0) | | | — | | | — | | | — | | | (30.0) | | | — | | | (30.0) | |
| Distributions to noncontrolling interest owners | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (1.3) | | | (1.3) | |
| Contribution from noncontrolling interest owner | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 46.9 | | | 46.9 | |
| Share-based compensation | — | | | — | | | — | | | — | | | 75.7 | | | — | | | — | | | 75.7 | | | — | | | 75.7 | |
| Other | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Balance at September 30, 2021 | $ | 0.5 | | | $ | — | | | $ | 1.8 | | | $ | (39.5) | | | $ | 5,057.7 | | | $ | (1,964.1) | | | $ | (100.2) | | | $ | 2,956.2 | | | $ | 768.2 | | | $ | 3,724.4 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
LIBERTY LATIN AMERICA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) | | | | Nine months ended September 30, | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2022 | | 2021 |
| | | in millions | | in millions |
| Cash flows from operating activities: | Cash flows from operating activities: | | Cash flows from operating activities: | |
| Net earnings (loss) | $ | 164.4 | | | $ | (774.8) | | |
| Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | | |
| Net earnings | | Net earnings | $ | 93.2 | | | $ | 90.7 | |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | | Adjustments to reconcile net earnings to net cash provided by operating activities: | |
| Share-based compensation expense | Share-based compensation expense | 88.9 | | | 75.3 | | Share-based compensation expense | 30.0 | | | 23.0 | |
| Depreciation and amortization | Depreciation and amortization | 753.4 | | | 661.5 | | Depreciation and amortization | 214.1 | | | 243.1 | |
| Impairment | Impairment | 3.0 | | | 279.9 | | Impairment | 1.9 | | | 2.3 | |
| Loss (gain) on dispositions | Loss (gain) on dispositions | (10.0) | | | 0.3 | | Loss (gain) on dispositions | 0.1 | | | (8.6) | |
| Amortization of debt financing costs, premiums and discounts, net | Amortization of debt financing costs, premiums and discounts, net | 24.4 | | | 22.0 | | Amortization of debt financing costs, premiums and discounts, net | 9.5 | | | 6.8 | |
| Realized and unrealized losses (gains) on derivative instruments, net | Realized and unrealized losses (gains) on derivative instruments, net | (464.2) | | | 239.7 | | Realized and unrealized losses (gains) on derivative instruments, net | 33.7 | | | (114.9) | |
| Foreign currency transaction losses, net | 206.0 | | | 115.1 | | |
| Foreign currency transaction losses (gains), net | | Foreign currency transaction losses (gains), net | (96.6) | | | 25.4 | |
| Losses on debt extinguishment | Losses on debt extinguishment | 25.2 | | | 45.1 | | Losses on debt extinguishment | — | | | 23.3 | |
| Impairment of an investment | 41.1 | | | — | | |
| Deferred income tax expense (benefit) | 46.1 | | | (69.5) | | |
| | Deferred income tax expense | | Deferred income tax expense | 0.8 | | | 8.7 | |
| Changes in operating assets and liabilities, net of the effect of acquisitions and dispositions | Changes in operating assets and liabilities, net of the effect of acquisitions and dispositions | (160.5) | | | (103.6) | | Changes in operating assets and liabilities, net of the effect of acquisitions and dispositions | (164.4) | | | (96.3) | |
| Net cash provided by operating activities | Net cash provided by operating activities | 717.8 | | | 491.0 | | Net cash provided by operating activities | 122.3 | | | 203.5 | |
| | Cash flows from investing activities: | Cash flows from investing activities: | | Cash flows from investing activities: | |
| Capital expenditures | Capital expenditures | (544.7) | | | (418.3) | | Capital expenditures | (164.7) | | | (135.6) | |
| Cash paid in connection with acquisitions, net of cash acquired | Cash paid in connection with acquisitions, net of cash acquired | (520.6) | | | (0.1) | | Cash paid in connection with acquisitions, net of cash acquired | (24.8) | | | — | |
| Proceeds from dispositions | | Proceeds from dispositions | 0.5 | | | 20.4 | |
| Other investing activities, net | Other investing activities, net | (10.0) | | | (0.5) | | Other investing activities, net | — | | | (11.2) | |
| Net cash used by investing activities | Net cash used by investing activities | (1,075.3) | | | (418.9) | | Net cash used by investing activities | (189.0) | | | (126.4) | |
| | Cash flows from financing activities: | Cash flows from financing activities: | | Cash flows from financing activities: | |
| Borrowings of debt | Borrowings of debt | 1,046.2 | | | 1,289.0 | | Borrowings of debt | 38.6 | | | 696.0 | |
| Payments of principal amounts of debt and finance lease obligations | Payments of principal amounts of debt and finance lease obligations | (443.8) | | | (1,259.5) | | Payments of principal amounts of debt and finance lease obligations | (50.2) | | | (288.3) | |
| Issuance of Liberty Latin America common shares, net | — | | | 349.6 | | |
| Net cash received (paid) related to derivative instruments | (43.0) | | | 180.6 | | |
| | Repurchase of Liberty Latin America common shares | | Repurchase of Liberty Latin America common shares | (55.3) | | | — | |
| Net cash paid related to derivative instruments | | Net cash paid related to derivative instruments | — | | | (43.0) | |
| | Payment of financing costs and debt redemption premiums | Payment of financing costs and debt redemption premiums | (37.2) | | | (75.4) | | Payment of financing costs and debt redemption premiums | (2.6) | | | (26.8) | |
| Repurchase of Liberty Latin America common shares | (30.0) | | | (9.5) | | |
| Distributions to noncontrolling interest owners | (1.3) | | | (2.3) | | |
| Capital contribution from noncontrolling interest owner | 46.9 | | | — | | |
| | Other financing activities, net | Other financing activities, net | (7.2) | | | (7.6) | | Other financing activities, net | (8.7) | | | (4.9) | |
| Net cash provided by financing activities | 530.6 | | | 464.9 | | |
| Net cash provided (used) by financing activities | | Net cash provided (used) by financing activities | (78.2) | | | 333.0 | |
| | Effect of exchange rate changes on cash, cash equivalents and restricted cash | Effect of exchange rate changes on cash, cash equivalents and restricted cash | (6.7) | | | (11.1) | | Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2.0 | | | 2.8 | |
| | Net increase in cash, cash equivalents and restricted cash | 166.4 | | | 525.9 | | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | | Net increase (decrease) in cash, cash equivalents and restricted cash | (142.9) | | | 412.9 | |
| | Cash, cash equivalents and restricted cash: | Cash, cash equivalents and restricted cash: | | Cash, cash equivalents and restricted cash: | |
| Beginning of period | Beginning of period | 912.5 | | | 2,457.0 | | Beginning of period | 1,074.2 | | | 912.5 | |
| End of period | End of period | $ | 1,078.9 | | | $ | 2,982.9 | | End of period | $ | 931.3 | | | $ | 1,325.4 | |
| Cash paid for interest | Cash paid for interest | $ | 361.0 | | | $ | 384.6 | | Cash paid for interest | $ | 150.4 | | | $ | 138.1 | |
Net cash paid for taxes | Net cash paid for taxes | $ | 21.7 | | | $ | 42.3 | | Net cash paid for taxes | $ | 25.2 | | | $ | 14.7 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
76
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements
September 30, 2021March 31, 2022
(unaudited)
(1) Basis of Presentation
See the Glossary of defined terms at the beginning of this Quarterly Report on Form 10-Q for terms used throughout the condensed consolidated financial statements.
General
Liberty Latin America Ltd. is a registered company in Bermuda that primarily includes: (i) C&W; (ii) Liberty Communications PR; (iii) VTR; and (iv) LBT CT Communications, S.A. (a less than wholly-owned entity) and its subsidiaries, which include Cabletica and, as of August 9, 2021 and as further described in note 4, Telefónica-Costanica Costa Rica. C&W owns less than 100% of certain of its consolidated subsidiaries, including C&W Bahamas, C&W Jamaica and CWP.
We are an international provider of fixed, mobile and subsea telecommunications services. We provide:
A.residential and B2B services in:
i.over 20 countries across Latin America and the Caribbean through two of our reportable segments, C&W Caribbean and Networks, and C&W Panama;
ii.Puerto Rico, through our reportable segment Liberty Puerto Rico;
iii.Chile, through our reportable segment VTR;
iv.Costa Rica, through Cabletica and its subsidiary, Telefónica-Costanica Costa Rica; and
B.through the Networks & LatAm business of our C&W Caribbean and Networks segment, (i) B2B services in certain other countries in Latin America and the Caribbean and (ii) wholesale communication services over its subsea and terrestrial fiber optic cable networks that connect overapproximately 40 markets in that region.
Prior to the first quarter of 2021, VTR and Cabletica were collectively 1 operating segment. As a result of organizational changes during the first quarter of 2021, these operations became separate operating segments. Following the Telefónica-Costa Rica Acquisition on August 9, 2021 (as further described in note 4), Cabletica and Telefónica-Costa Rica now comprise our Costa Rica operating and reportable segment. For additional information regarding our segment changes, see note 19.
Effective September 29, 2021, in connection with the pending formation of the Chile JV (as further described in note 8),8, we beganare accounting for the Chile JV Entities as “held"held for sale.” Accordingly, the assets and liabilities of the Chile JV Entities, excluding certain cash balances, are included in assets held for sale and liabilities associated with assets held for sale, respectively, on our September 30, 2021 condensed consolidated balance sheet.sale”. Consistent with the applicable guidance, we have not reflected similar reclassifications to exclude the Chile JV Entities from continuing operations in our condensed consolidated statements of operations or cash flows and related footnote disclosures. For additional information, see note 8.
Unless otherwise indicated, ownership percentages are calculated as of September 30, 2021.March 31, 2022.
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by U.S. GAAP or Securities and Exchange Commission rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 20202021 Form 10-K.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used in accounting for, among other things, the valuation of acquisition-related assets and liabilities, expected credit losses, programming and copyright
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
expenses, deferred income taxes and related valuation allowances, loss contingencies, fair value measurements, impairment assessments, capitalization of internal costs associated with construction and installation activities, useful lives of long-lived assets and actuarial liabilities associated with certain benefit plans. Actual results could differ from those estimates. Certain prior periodprior-period amounts have been reclassified to conform to the current period presentation.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
Correction of Immaterial Errors
As further described in our 2021 Form 10-K, during the fourth quarter of 2021 we identified certain errors in our previously reported condensed consolidated financial statements, primarily related to the understatement of depreciation and amortization of long-lived assets, and to a lesser extent, asset impairments. The errors did not have an impact on our revenue, key segment performance measure (Adjusted OIBDA), cash flow from operations or property and equipment additions. The revisions to our March 31, 2021 condensed consolidated statement of operations as a result of these immaterial error corrections were not material.
(2) Accounting Changes and Recent Accounting Pronouncements
Accounting Changes
ASU 2018-14
In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14), which removes and modifies certain existing disclosure requirements and adds new disclosure requirements related to employer sponsored defined benefit pension or other postretirement plans. We adopted ASU 2018-14 effective January 1, 2021 and it did not have a material impact on the disclosures in our condensed consolidated financial statements.
Recent Accounting Pronouncements
ASU 2020-04 and ASU 2021-01
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04), which provides optional guidance for a limited time to ease the potential accounting burden associated with transitioning away from reference rates, such as the LIBOR, which regulators in the U.K. have announced will be phased out by the end of 2021. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) (ASU 2021-01), which clarifies certain optional expedients and exceptions in ASC 848. The expedients and exceptions provided by ASU 2020-04 and ASU 2021-01 are for the application of U.S. GAAP to contracts, hedging relationships and other transactions affected by the rate reform, and will not be available after December 31, 2022, other than for certain hedging relationships entered into before December 31, 2022. We do not currently expect that the phase out of LIBOR will have a material impact on our consolidated financial statements.
ASU 2020-06
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity’s Own Equity: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which (i) reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification and (ii) makes targeted improvements to convertible instruments and earnings-per-share disclosure requirements. We adopted ASU 2020-06 is effective January 1, 2022 and it did not have a material impact on our condensed consolidated financial statements.
Recent Accounting Pronouncements
ASU 2020-04 and ASU 2021-01
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04), which provides optional guidance for annual reporting periods after December 15,a limited time to ease the potential accounting burden associated with transitioning away from reference rates, such as the LIBOR. In January 2021, including interim periods within those fiscal years, with early adoption permitted, but no earlier than annualthe FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) (ASU 2021-01), which clarifies certain optional expedients and interim periodsexceptions in fiscal years beginning after December 15, 2020. While weASC 848. The expedients and exceptions provided by ASU 2020-04 and ASU 2021-01 are still evaluatingfor the impactapplication of ASU 2020-06, weU.S. GAAP to contracts, hedging relationships and other transactions affected by the rate reform. In March 2021, LIBOR’s regulator announced that certain tenors of USD LIBOR will continue to be published through June 30, 2023. We do not currently expect itthat the phase out of LIBOR will have a material impact on our condensed consolidated financial statements.
(3) Current Expected Credit Losses
The changes in our allowance for expected credit losses associated with trade receivables are set forth below:
| | | | | | | | | | | |
| Three months ended March 31, |
| 2022 | | 2021 |
| in millions |
| | | |
| Balance at beginning of period | $ | 80.3 | | | $ | 100.0 | |
| Provision for expected losses | 17.3 | | | 12.3 | |
| Write-offs | (6.9) | | | (13.5) | |
| Foreign currency translation adjustments and other | 2.1 | | | (3.9) | |
| Balance at end of period | $ | 92.8 | | | $ | 94.9 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
(3) Current Expected Credit Losses
The changes in our trade receivables’ allowance for expected credit losses associated with our current and long-term notes receivables are set forth below:
| | | Nine months ended September 30, | | Three months ended March 31, |
| | 2021 | | 2020 | | 2022 | | 2021 |
| | in millions | | in millions |
| | Balance at beginning of period | Balance at beginning of period | $ | 100.0 | | | $ | 87.3 | | Balance at beginning of period | $ | 32.3 | | | $ | 16.2 | |
| Provision for expected losses | Provision for expected losses | 38.6 | | | 50.3 | | Provision for expected losses | 1.6 | | | 1.9 | |
| Write-offs | (48.7) | | | (45.3) | | |
| Reclassification to assets held for sale | (9.7) | | | — | | |
| Foreign currency translation adjustments and other | Foreign currency translation adjustments and other | 0.3 | | | 4.5 | | Foreign currency translation adjustments and other | (0.5) | | | — | |
| Balance at end of period | Balance at end of period | $ | 80.5 | | | $ | 96.8 | | Balance at end of period | $ | 33.4 | | | $ | 18.1 | |
(4) Acquisitions
Pending Acquisition
Claro Panama Acquisition. On September 14, 2021, we entered into a definitive agreement to acquire América Móvil’s operations in Panama in an all-cash transaction based upon an enterprise value of $200 million on a cash- and debt-free basis. The transaction is subject to certain customary closing conditions, including regulatory approvals, and is expected to close induring the first halfsecond quarter of 2022.
2021 Acquisition
Telefónica-Costanica Costa Rica Acquisition. On July 30, 2020, we entered into the Telefónica Acquisition Agreement to acquire Telefónica S.A.’s operations in Costa Rica in an all-cash transaction based upon an enterprise value of $500 million on a cash- and debt-free basis. On August 9, 2021, we completed the acquisition of all of the outstanding shares of Telefónica-Costanica Costa Rica. The Telefónica-Costanica Costa Rica Acquisition was financed through a combination of debt, existing cash and a $47 million equity contribution from the noncontrolling interest owner of our Cabletica entity, as further described in note 17.entity.
The following table sets forth a reconciliationDuring the first quarter of 2022, we finalized the stated purchase price included infor the Telefónica Acquisition Agreementto the net cash paid for the Telefónica-CostaCosta Rica Acquisition, (in millions):
| | | | | |
Stated Telefónica Acquisition Agreement purchase price | $ | 500.0 | |
Preliminary working capital adjustments | 37.6 | |
Total purchase price | 537.6 | |
Opening balance sheet cash | (17.0) | |
Net cash paid for the Telefónica-Costa Rica Acquisition | $ | 520.6 | |
which resulted in a reduction in total consideration paid of $12 million, $8 million of which was received during the quarter, and $4 million of which we expect to receive during the second quarter of 2022. The proceeds received from the final purchase price adjustments have been reflected as an investing activity in our condensed consolidated statement of cash flows.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
We have accounted for the Telefónica-Costanica Costa Rica Acquisition as a business combination using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets of Telefónica-Costanica Costa Rica based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. The preliminary opening balance sheet is subject to adjustment based on our final assessment of the fair values of the acquired identifiable net assets and liabilities. The items with the highest likelihood to change upon finalization of the valuation processinclude property and equipment, goodwill, intangible assets, leases and income taxes. A summary of the purchase price and the preliminary opening balance sheet of Telefónica-Costanica Costa Rica at the August 9, 2021 acquisition date areis presented in the following table (in millions):
| | | | | |
| Current assets (a) | $ | 83.374.7 | |
| Goodwill (b) | 260.1250.8 | |
| Property and equipment | 97.2148.8 | |
| Intangible assets subject to amortization (c) | 166.0131.9 | |
| Other assets (d) | 173.0170.7 | |
| Current liabilities (e) | (83.2)(88.6) | |
| Long-term liabilities (f) | (158.8)(163.2) | |
Total purchase price (g) | $ | 537.6525.1 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
(a)Primarily consists of trade receivables, notes receivables related to equipment installment-planEIP receivables and cash.
(b)The goodwill recognized in connection with the Telefónica-Costanica Costa Rica Acquisition is primarily attributable to (i) the ability to take advantage of Telefónica-Costanica Costa Rica’s existing mobile network to gain immediate access to potential customers, and (ii) synergies that are expected to be achieved through the integration of Telefónica-Costanica Costa Rica with Liberty Latin America’s existing business in Costa Rica, Cabletica. Due to the nature of the Telefónica-Costanica Costa Rica Acquisition, no tax deductions related to goodwill are expected.
(c)At August 9, 2021, the preliminary assessments of the weighted average useful lives of the acquired customer relationship intangible assets and spectrum intangible assets were approximately 87 years and 25 years, respectively.
(d)Long-termOther assets primarily consist of:of the long-term portion of note receivables related to equipment installment-planEIP receivables and operating lease right-of-use assets.
(e)Primarily consists of accounts payable and the current portion of operating lease obligations.
(f)Long-term liabilities primarily consistPrimarily consists of the non-current portion of operating lease obligations and deferred tax liabilities.
(g)Broadband VI, LLC AcquisitionAmount excludes $10 million of direct acquisition costs incurred during 2021. Direct acquisition costs are included in impairment, restructuring and other operating items, net, in our consolidated statements of operations.
Our condensed consolidated statements of operations for each of the three and nine months ended September 30,. Effective December 31, 2021, include revenue and net earnings of $41 million and $3 million, respectively, attributable to Telefónica-Costa Rica.
2020 Acquisition
AT&T Acquisition. On October 31, 2020, we acquired from AT&T all96% of the outstanding shares of Broadband VI, LLC for $33 million, the AT&T Acquired Entities,payment of which following the closing of the AT&T Acquisition are referredoccurred in January 2022, subject to as Liberty Mobilecertain post-closing adjustments. Broadband VI, LLC provides fixed services to residential and its subsidiaries. The operations acquiredbusiness customers in the AT&T Acquisition provide consumer mobile and B2B services in Puerto Rico and the U.S. Virgin Islands.
As a condition of approval of the AT&T Acquisition, the United States Department of Justice required us to divest certain B2B operations that were a part of our then-existing operations in Puerto Rico. We satisfied this condition in January 2021 by divesting those B2B operations for a stated sales price of $22 million. In connection with this divestiture, we recognized a gain on sale of $9 million, whichIslands and is included in impairment, restructuring and other operating items, net, in our condensed consolidated statement of operations.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
AT&T is providing ongoing support to the AT&T Acquired Entities under the AT&T TSA for a period up to 36 months following the closing of the AT&T Acquisition. Services under the AT&T TSA include, but are not limited to, (i) network operations, (ii) customer service, (iii) finance and accounting, (iv) information technology, (v) sales and marketing and (vi) content-related services. We may terminate any services under the AT&T TSA upon 60 business days’ notice to AT&T in accordance with the terms and conditions of the AT&T TSA.
We have accounted for the AT&T Acquisition as a business combination using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets of the AT&T Acquired Entities based on assessments of their respective fair values, and the excess of the total purchase price over the fair values of these identifiable net assets was allocated to goodwill. A summary of the purchase price and the opening balance sheet of the AT&T Acquired Entities at the October 31, 2020 acquisition date is presented in the following table. The opening balance sheet presented below reflects our final purchase price allocation (in millions):
| | | | | |
Current assets (a) (b)Puerto Rico reportable segment. | $ | 155.6 | |
Goodwill (c) | 196.9 | |
Property and equipment | 768.6 | |
Intangible assets subject to amortization (d) | 85.6 | |
Intangible assets not subject to amortization (e) | 1,043.0 | |
Other assets (b) (g) | 272.8 | |
Current liabilities (f) (g) | (67.9) | |
Long-term debt and finance lease obligations | (10.6) | |
Non-current deferred tax liabilities | (344.3) | |
Other long-term liabilities (g) | (167.3) | |
Total purchase price (h) | $ | 1,932.4 | |
(a)Current assets consists of trade receivables, prepaid expenses and other current assets.
(b)Current assets and other assets include $67 million and $39 million, respectively, in equipment installment-plan receivables.
(c)The goodwill recognized in connection with the AT&T Acquisition is primarily attributable to (i) the ability to take advantage of the AT&T Acquired Entities’ existing mobile network to gain immediate access to potential customers and (ii) synergies that are expected to be achieved through the integration of the AT&T Acquired Entities with Liberty Latin America. Due to the nature of the AT&T Acquisition, no tax deductions related to goodwill are expected.
(d)Amount includes intangible assets related to customer relationships. At October 31, 2020, the weighted average useful life of the acquired customer relationship intangible assets was approximately 10 years.
(e)Amount represents the value of spectrum licenses.
(f)Current liabilities include accounts payable, current portion of debt and finance lease obligations and other accrued and current liabilities.
(g)Other assets, current liabilities and other long-term liabilities include $182 million, $33 million and $163 million related to operating lease right-of-use assets, current operating lease obligations and non-current operating lease obligations, respectively.
(h)Amount excludes$51 million and $5 million of direct acquisition costs, incurred during 2020 and 2019, respectively.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
Supplemental Pro Forma Information
The pro forma financial information set forth in the tablestable below is based on available information and assumptions that we believe are reasonable. The pro forma financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what our results of operations would have been had these acquisitionsthe Telefónica Costa Rica Acquisition occurred on the date indicatedJanuary 1, 2020 nor should it be considered representative of our future financial condition or results of operations. The pro forma information set forth in the tablestable below include,includes, as applicable, tax-effected pro forma adjustments primarily related to:
i.the impact of estimated revenue and costs associated with the AT&T TSA that replaced parent-company allocations includedtransition services agreement entered into in connection with the historical financial statements of the AT&T Acquired Entities;Telefónica Costa Rica Acquisition;
ii.the impact of new rate agreements associated with roaming, subsea and ethernet services stemming from the AT&T Acquisition;
iii.the alignment of accounting policies;
iv.iii.interest expense related to additional borrowings in conjunction with the AT&T Acquisition and the Telefónica-Costanica Costa Rica Acquisition;
iv.depreciation expense related to acquired tangible assets;
v.amortization expense related to acquired intangible assets; and
vi.the elimination of direct acquisition costs.
The following unaudited pro forma condensed consolidated operating results give effect to the Telefónica-Costanica Costa Rica Acquisition, as if it had been completed as of January 1, 2020:
| | | | | | | | | | | |
| | | |
| | | |
| | | |
| | | |
| Three months ended September 30, 2021 | | Nine months ended September 30, 2021 |
| in millions |
| | | |
| Revenue | $ | 1,220.8 | | | $ | 3,684.8 | |
| Net earnings attributable to Liberty Latin America shareholders | $ | 81.7 | | | $ | 191.6 | |
| | | | | | | |
| | | |
| | | |
| | | |
| | | |
| | | Three months ended March 31, 2021 |
| | | in millions |
| | | |
| Revenue | | | $ | 1,233.0 | |
| Net earnings attributable to Liberty Latin America shareholders | | | $ | 86.7 | |
The following unaudited pro forma condensed consolidated operating results give effect
Liberty Latin America Ltd.
Notes to (i) the Telefónica-Costa Rica Acquisition, as if it had been completed as of January 1, 2020, and (ii) the AT&T Acquisition, as if it had been completed as of January 1, 2019:Condensed Consolidated Financial Statements – (Continued)
| | | | | | | | | | | |
| | | |
| | | |
| | | |
| | | |
| Three months ended September 30, 2020 | | Nine months ended September 30, 2020 |
| in millions |
| | | |
| Revenue | $ | 1,184.5 | | | $ | 3,518.1 | |
| Net loss attributable to Liberty Latin America shareholders | $ | (44.3) | | | $ | (542.1) | |
(unaudited)
(5) Derivative Instruments
In general, we seek to enter into derivative instruments to protect againstmitigate risk associated with (i) increases in the interest rates on our variable-rate debt and (ii) foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity. In this regard, through our subsidiaries, we have entered into various derivative instruments to manage interest rate exposure and foreign currency exposure with respect to the U.S. dollar, the CLP, the COP and the JMD.CRC. With the exception of certain foreign currency forward contracts, we do not apply hedge accounting to our derivative instruments. Accordingly, changes in the fair values of most of our derivative instruments are recorded in realized and unrealized gains or losses on derivative instruments in our condensed consolidated statements of operations.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
The following table provides details of the fair values of our derivative instrument assets and liabilities:
| | | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| | | Current (a)(b) | | Long-term (a)(b) | | Total | | Current (a) | | Long-term (a) | | Total | | Current (a) | | Long-term (a) | | Total | | Current (a) | | Long-term (a) | | Total |
| | | in millions | | in millions |
| Assets: | | |
| Cross-currency and interest rate derivative contracts (c) | $ | — | | | $ | 14.1 | | | $ | 14.1 | | | $ | 0.7 | | | $ | 4.4 | | | $ | 5.1 | | |
| | | Liabilities: | | |
| Assets (b): | | Assets (b): | |
| Cross-currency and interest rate derivative contracts (c) | Cross-currency and interest rate derivative contracts (c) | $ | 44.7 | | | $ | 57.5 | | | $ | 102.2 | | | $ | 71.4 | | | $ | 403.0 | | | $ | 474.4 | | Cross-currency and interest rate derivative contracts (c) | $ | 10.6 | | | $ | 128.8 | | | $ | 139.4 | | | $ | 15.1 | | | $ | 25.3 | | | $ | 40.4 | |
| Foreign currency forward contracts | Foreign currency forward contracts | 0.1 | | | — | | | 0.1 | | | 18.8 | | | — | | | 18.8 | | Foreign currency forward contracts | 3.2 | | | — | | | 3.2 | | | 0.1 | | | — | | | 0.1 | |
| Total | Total | $ | 44.8 | | | $ | 57.5 | | | $ | 102.3 | | | $ | 90.2 | | | $ | 403.0 | | | $ | 493.2 | | Total | $ | 13.8 | | | $ | 128.8 | | | $ | 142.6 | | | $ | 15.2 | | | $ | 25.3 | | | $ | 40.5 | |
| | Liabilities (b): | | Liabilities (b): | |
| Cross-currency and interest rate derivative contracts (c) | | Cross-currency and interest rate derivative contracts (c) | $ | 11.4 | | | $ | 22.8 | | | $ | 34.2 | | | $ | 33.3 | | | $ | 62.1 | | | $ | 95.4 | |
| Foreign currency forward contracts | | Foreign currency forward contracts | — | | | — | | | — | | | 5.8 | | | — | | | 5.8 | |
| Total | | Total | $ | 11.4 | | | $ | 22.8 | | | $ | 34.2 | | | $ | 39.1 | | | $ | 62.1 | | | $ | 101.2 | |
(a)Our current derivative assets, long-term derivative assets, current derivative liabilities and long-term derivative liabilities are included in other current assets, net, other assets, net, other accrued and current liabilities and other long-term liabilities, respectively, in our condensed consolidated balance sheets.
(b)In connection with the pending formation of the Chile JV, the derivative assets and liabilities associated with the Chile JV Entities have been included in assets held for sale and liabilities associated with assets held for sale, respectively, on our September 30, 2021 condensed consolidated balance sheet.sheets. For information regarding the pending formation of the Chile JV and the held-for-sale presentation of the Chile JV Entities, see note 8.
(c)We consider credit risk relating to our and our counterparties’ nonperformance in the fair value assessment of our derivative instruments. In all cases, the adjustments take into account offsetting liability or asset positions within each of our primary borrowing groups (see note 9) and are recorded in realized and unrealized gains (losses) on derivative instruments, net.net, in our condensed consolidated statements of operations. For further information regarding our fair value measurements, see note 6.
The derivative assets set forth in the table above exclude our Weather Derivatives as they are not accounted for at fair value. The premium payments associated with our Weather Derivatives are included in other current assets, net, in our condensed consolidated balance sheets.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
The details of our realized and unrealized gains (losses) on derivative instruments, net, are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| | in millions |
| | | | | | | |
| Cross-currency and interest rate derivative contracts (a) (b) | $ | 285.1 | | | $ | (70.7) | | | $ | 464.2 | | | $ | (234.7) | |
| Foreign currency forward contracts | 15.4 | | | (2.3) | | | 20.1 | | | 5.8 | |
| Weather Derivatives | (8.5) | | | (5.1) | | | (20.1) | | | (10.8) | |
| Total | $ | 292.0 | | | $ | (78.1) | | | $ | 464.2 | | | $ | (239.7) | |
| | | | | | | | | | | | | | | |
| | | Three months ended March 31, |
| | | | | | 2022 | | 2021 |
| | | | | | in millions |
| | | | | | | |
| Cross-currency and interest rate derivative contracts (a) | | | | | $ | (17.6) | | | $ | 119.5 | |
| Foreign currency forward contracts | | | | | (8.3) | | | 0.7 | |
| Weather Derivatives | | | | | (7.8) | | | (5.3) | |
| Total | | | | | $ | (33.7) | | | $ | 114.9 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
(a) Changes in the credit risk valuation adjustments associated with our cross-currency and interest rate derivative contracts resulted in netgains (losses) losses of ($15 million)$5 million and $1$21 million during the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, and ($44 million) and $41 million during the nine months ended September 30, 2021 and 2020, respectively. Included in these amounts for the three and nine months ended September 30, 2021 are net lossesgains (losses) of $12$2 million and $29 million,($4 million), respectively, related to the Chile JV Entities.
(b) The losses for the nine months ended September 30, 2020 include a realized gain of $71 million associated with the settlement of certain cross-currency interest rate swaps at VTR in June 2020 that were unwound in connection with the refinancing of certain VTR debt in 2020.Entities.
The following table sets forth the classification of the net cash inflows (outflows)outflows of our derivative instruments:
| | | | Nine months ended September 30, | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2022 | | 2021 |
| | | in millions | | in millions |
| | Operating activities | Operating activities | $ | (109.0) | | | $ | (32.1) | | Operating activities | $ | (1.4) | | | $ | (23.8) | |
| Investing activities | Investing activities | (2.0) | | | 7.4 | | Investing activities | 1.2 | | | (0.7) | |
| Financing activities (a) | Financing activities (a) | (43.0) | | | 180.6 | | Financing activities (a) | — | | | (43.0) | |
| Total | Total | $ | (154.0) | | | $ | 155.9 | | Total | $ | (0.2) | | | $ | (67.5) | |
(a) The 2021 amount is associated with activity during the first quarter of 2021 primarily related to (i) $11 million associated with the settlement of interest rate swaps at VTR in connection with the refinancing of the VTR Credit Facilities and (ii) $32 million associated with the settlement of interest rate swaps at Liberty Puerto Rico in connection with the refinancing of the LPR Credit Facilities. The 2020 amount is primarily related to the settlement of certain cross-currency interest rate swaps at VTR. For additional information regarding our debt refinancing activity, see note 9.
Counterparty Credit Risk
We are exposed to the risk that the counterparties to the derivative instruments of our borrowing groups will default on their obligations to us. We manage these credit risks through the evaluation and monitoring of the creditworthiness of, and concentration of risk with, the respective counterparties. In this regard, credit risk associated with our derivative instruments is spread across a relatively broad counterparty base of banks and financial institutions. Collateral has not been posted by either party under the derivative instruments of our borrowing groups. At September 30, 2021,March 31, 2022, our exposure to counterparty credit risk resulting fromassociated with our net derivative position was not material.instruments, as set forth in the assets and liabilities table above, included derivative assets with an aggregate fair value of $108 million.
Each of our borrowing groups has entered into derivative instruments under agreements with each counterparty that contain master netting arrangements that are applicable in the event of early termination by either party to such derivative instrument. The master netting arrangements under each of these master agreements are limited to the derivative instruments governed by the relevant master agreement within each individual borrowing group and are independent of similar arrangements of our other subsidiary borrowing groups.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
Details of our Derivative Instruments
Cross-currency Derivative Contracts
As noted above, we are exposed to foreign currency exchange rate risk in situations where our debt is denominated in a currency other than the functional currency of the operations whose cash flows support our ability to service, repay or refinance such debt. Although we generally seek to match the denomination of our borrowings with the functional currency of the operations that are supporting the respective borrowings, market conditions or other factors may cause us to enter into borrowing arrangements that are not denominated in the functional currency of the underlying operations (unmatched debt). Our policy is generally to provide for an economic hedge against foreign currency exchange rate movements, whenever possible and when cost effective to do so, by using derivative instruments to synthetically convert unmatched debt into the applicable underlying currency. At September 30, 2021,March 31, 2022, our C&W borrowing group had a cross-currency swap contract with
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
notional amounts due from and to counterparties of $56 million and COP 197,014 million, respectively, with a remaining contractual life of 4.84.3 years.
Interest Rate Derivative Contracts
Interest Rate Swaps
As noted above, we enter into interest rate swaps to protect againstmitigate risk associated with increases in the interest rates on our variable-rate debt. Pursuant to these derivative instruments, we typically pay fixed interest rates and receive variable interest rates on specified notional amounts. The following table sets forth the total U.S. dollar equivalents of the notional amounts and the related weighted average remaining contractual lives of our interest rate swap contracts at September 30, 2021:March 31, 2022:
| | Borrowing group | Borrowing group | | Notional amount due from counterparty | | Weighted average remaining life | Borrowing group | | Notional amount due from counterparty | | Weighted average remaining life |
| | | | in millions | | in years | | | in millions | | in years |
| | C&W (a) | C&W (a) | $ | 2,840.0 | | | 6.8 | C&W (a) | $ | 2,690.0 | | | 5.1 |
| | Liberty Puerto Rico | Liberty Puerto Rico | $ | 500.0 | | | 10.2 | Liberty Puerto Rico | $ | 500.0 | | | 6.5 |
| | Costa Rica (b) | Costa Rica (b) | $ | 276.7 | | | 2.0 | Costa Rica (b) | $ | 276.7 | | | 1.8 |
(a)Includes forward-starting derivative instruments and, on certain interest rate swaps, an embedded floor of 0%.
(b)Includes an embedded floor of 0.75%.
Basis Swaps
Basis swaps involve the exchange of attributes used to calculate our floating interest rates, including (i) the benchmark rate, (ii) the underlying currency and/or (iii) the borrowing period. We typically enter into these swaps to optimize our interest rate profile based on our current evaluations of yield curves, our risk management policies and other factors. The following table sets forth the total U.S. dollar equivalents of the notional amounts and the related weighted average remaining contractual lives of our basis swap contracts at September 30, 2021:March 31, 2022:
| | Borrowing group | Borrowing group | | Notional amount due from counterparty | | Weighted average remaining life | Borrowing group | | Notional amount due from counterparty | | Weighted average remaining life |
| | | | in millions | | in years | | | in millions | | in years |
| | C&W | C&W | $ | 1,510.0 | | | 0.3 | C&W | $ | 2,100.0 | | | 1.3 |
| | Liberty Puerto Rico | Liberty Puerto Rico | $ | 500.0 | | | 0.3 | Liberty Puerto Rico | $ | 620.0 | | | 1.3 |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
Foreign Currency Forwards Contracts
We enter into foreign currency forward contracts with respect to non-functional currency exposure. At September 30, 2021, our Costa Rica borrowing group had foreign currency forward contracts withThe following table sets forth the total U.S. dollar equivalents of the notional amounts due from and to counterparties of $11 million and CRC 6,828 million, respectively, with athe related weighted average remaining contractual lifelives of 0.2 years.our foreign currency forwards contracts at March 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Notional amount due from counterparty | | Notional amount due
to counterparty | | Weighted average remaining life |
| | | in millions | | in years |
| | | | | | | |
| LLA UK Holding Limited (a) | CLP | 73,000.0 | | $ | 88.1 | | 0.5 |
| | | | | | | |
| Costa Rica borrowing group | $ | 59.1 | | | CRC | 38,727.8 | | 0.3 |
Interest Rate Floors
Interest rate floors provide protection against interest rates falling below a pre-set level. During 2021, we entered intoAt March 31, 2022, our Liberty Puerto Rico borrowing group had an interest rate floor at Liberty Puerto Rico associated with the refinancing of the LPR Credit Facilities. At September 30, 2021, thea total notional amount of our interest rate floor was $500$620 million withand a remaining contractual life of 7.06.5 years.
Interest Rate Caps
Interest rate caps provide protection against interest rates rising above a pre-set level. At March 31, 2022, our Liberty Puerto Rico borrowing group had interest rate caps with total notional amounts of $120 million and a remaining weighted average contractual life of 6.5 years.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
(6) Fair Value Measurements
General
We recorduse the fair value method to account for most of our derivative instruments at fair value.instruments. The reported fair values of our derivative instruments as of September 30, 2021 likely will not represent the value that will be paid or received upon the ultimate settlement or disposition of these assets and liabilities, as we expect that the values realized generally will be based on market conditions at the time of settlement, which may occur at the maturity of the derivative instrument or at the time of the repayment or refinancing of the underlying debt instrument.
U.S. GAAP provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
Recurring Fair Value Measurements
Derivatives
In order to manage our interest rate and foreign currency exchange risk, we have entered into various derivative instruments, as further described in note 5. The recurring fair value measurements of these derivative instruments are determined using discounted cash flow models. Most of the inputs to these discounted cash flow models consist of, or are derived from, observable Level 2 data for substantially the full term of these derivative instruments. This observable data mostly includes interest rate futures and swap rates, which are retrieved or derived from available market data. Although we may extrapolate or interpolate this data, we do not otherwise alter this data in performing our valuations. We incorporate a
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
credit risk valuation adjustment in our fair value measurements to estimate the impact of both our own nonperformance risk and the nonperformance risk of our counterparties. Our and our counterparties’ credit spreads represent our most significant Level 3 inputs, and these inputs are used to derive the credit risk valuation adjustments with respect to these instruments. As we would not expect changes in our or our counterparties’ credit spreads to have a significant impact on the valuations of these instruments, we have determined that these valuations fall under Level 2 of the fair value hierarchy. Our credit risk valuation adjustments with respect to our interest rate and cross-currency derivative contracts are quantified and further explained in note 5. The Sable Currency Swaps, which were fully settled during the first quarter of 2021, were our only Level 3 financial instruments due to the lack of Level 2 inputs for the valuation. The fair value of the Sable Currency Swaps at December 31, 2020 was $1 million, which is included in other assets, net, in our condensed consolidated balance sheet. The change in the fair value of the Sable Currency Swaps resulted in net gains (losses) of nil and $3 million during the three months ended September 30, 2021 and 2020, respectively, and ($1 million) and $16 million during the nine months ended September 30, 2021 and 2020, respectively, which are reflected in realized and unrealized gains (losses) on derivative instruments, net, in our condensed consolidated statements of operations.
NonrecurringNon-recurring Fair Value Measurements
Fair value measurements aremay also be used for purposes of nonrecurringnon-recurring valuations performed in connection with our acquisition accounting and impairment assessments.
Acquisition Accounting
The nonrecurring valuations associated with acquisition accounting, which use significant unobservable inputs and therefore fall under Level 3 ofDuring the fair value hierarchy, primarily include the valuation of property and equipment, customer relationships and spectrum intangible assets, as further described below:
•Property and equipment. The valuation of property and equipment may use either an indirect cost approach, which utilizes trends based on historical cost information, or a combination of indirect cost approach, market approach and direct replacement cost method, which considers factors such as current prices of the same or similar equipment, the age of the equipment and economic obsolescence.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
•Customer relationships. The valuation of customer relationships is primarily based on an excess earnings methodology, which is a form of a discounted cash flow analysis. The excess earnings methodology for customer relationship intangible assets requires us to estimate the specific cash flows expected from the acquired customer relationships, considering such factors as estimated customer life, the revenue expected to be generated over the life of the customer relationships, contributory asset charges and other factors.
•Spectrum intangible assets. The valuation of spectrum intangible assets may use either an adjusted market-based approach, which requires the calibration of observable market inputs to reflect the fair value of the assets acquired, or a combination of an adjusted market-based approach with other methods, such as an income-based approach (e.g. the “greenfield” valuation method), which requires a wide range of assumptions and inputs, including forecasting costs associated with building a complementary asset base.
During 2021,three months ended March 31, 2022, we performed nonrecurringdid not perform non-recurring valuations related to the preliminary acquisition accounting for the Telefónica-Costa Rica Acquisition and finalized our acquisition accounting for the AT&T Acquisition. The weighted average discount rates used in the valuations of the customer relationships acquired in the Telefónica-Costa Rica Acquisition and the AT&T Acquisition were approximately 11% and 10%, respectively. The weighted average discount rate used in the valuation of the spectrum licenses acquired in the AT&T Acquisition was approximately 8%.or impairments. For information related to the status of valuation work associated with assets acquired in connection with the Telefónica-Costanica Costa Rica Acquisition and the AT&T Acquisition, see note 4.
Other
During the third quarter of 2021, we recorded a $41 million impairment charge in connection with an impairment assessment of a cost basis investment.
(7) Long-lived Assets
Goodwill
Changes in the carrying amount of our goodwill are set forth below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| January 1,
2021 | | Acquisitions
and related
adjustments | | Reclassification to assets held for sale (a) | | Foreign
currency
translation
adjustments and other | | September 30,
2021 |
| | in millions |
| | | | | | | | | |
| C&W Caribbean and Networks | $ | 3,112.0 | | | $ | — | | | $ | — | | | $ | (48.6) | | | $ | 3,063.4 | |
| C&W Panama | 617.1 | | | — | | | — | | | — | | | 617.1 | |
| Liberty Puerto Rico | 629.9 | | | (155.3) | | | — | | | — | | | 474.6 |
| VTR | 374.6 | | | — | | | (329.1) | | | (45.5) | | | — | |
| Costa Rica | 151.9 | | | 260.1 | | | — | | | (5.5) | | | 406.5 | |
| Total | $ | 4,885.5 | | | $ | 104.8 | | | $ | (329.1) | | | $ | (99.6) | | | $ | 4,561.6 | |
(a)In connection with the pending formation of the Chile JV, the goodwill associated with the Chile JV Entities has been included in assets held for sale on our September 30, 2021 condensed consolidated balance sheet. For information regarding the pending formation of the Chile JV and the held-for-sale presentation of the Chile JV Entities, see note 8. | | | | | | | | | | | | | | | | | | | | | | | | | |
| January 1,
2022 | | Acquisitions
and related
adjustments | | Foreign
currency
translation
adjustments and other | | | | March 31,
2022 |
| | in millions |
| | | | | | | | | |
| C&W Caribbean and Networks | $ | 2,433.9 | | | $ | — | | | $ | 4.3 | | | | | $ | 2,438.2 | |
| C&W Panama | 617.1 | | | — | | | — | | | | | 617.1 | |
| Liberty Puerto Rico | 498.3 | | | 0.4 | | | — | | | | | 498.7 | |
| Costa Rica | 398.7 | | | (11.2) | | | (13.9) | | | | | 373.6 | |
| Total | $ | 3,948.0 | | | $ | (10.8) | | | $ | (9.6) | | | | | $ | 3,927.6 | |
Based on the results of our prior-year goodwill impairment test, if, among other factors, (i) our equity values were to decline significantly or (ii) the adverse impacts stemming from COVID-19, competition, economic, regulatory or other factors, including macro-economic and demographic trends, cause our results of operations or cash flows to be worse than currently anticipated, we could conclude in future periods that additional impairment charges of certain reporting units are required in order to reduce the carrying values of goodwill. Any such impairment charges could be significant.
Our accumulated goodwill impairments were $1,624$2,229 million at each of September 30, 2021March 31, 2022 and December 31, 2020.2021.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
Property and Equipment, Net
The details of our property and equipment and the related accumulated depreciation are set forth below:
| | | | | | | | | | | |
| September 30, 2021 (a) | | December 31,
2020 |
| | in millions |
| | | |
| Distribution systems | $ | 4,659.5 | | | $ | 5,082.9 | |
| CPE | 1,028.7 | | | 1,935.5 | |
| Support equipment, buildings and land | 1,473.1 | | | 1,721.3 | |
| 7,161.3 | | | 8,739.7 | |
| Accumulated depreciation | (2,914.4) | | | (3,828.3) | |
| Total | $ | 4,246.9 | | | $ | 4,911.4 | |
(a)In connection with the pending formation of the Chile JV, the property and equipment and related accumulated depreciation associated with the Chile JV Entities have been included in assets held for sale on our September 30, 2021 condensed consolidated balance sheet. For information regarding the pending formation of the Chile JV and the held-for-sale presentation of the Chile JV Entities, see note 8. | | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| | in millions |
| | | |
| Distribution systems | $ | 4,342.1 | | | $ | 4,208.8 | |
| CPE | 928.5 | | | 893.7 | |
| Support equipment, buildings and land | 1,586.9 | | | 1,641.6 | |
| 6,857.5 | | | 6,744.1 | |
| Accumulated depreciation | (2,721.1) | | | (2,575.7) | |
| Total | $ | 4,136.4 | | | $ | 4,168.4 | |
During the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, we recorded non-cash increases to our property and equipment related to vendor financing arrangements aggregating $65$32 million and $81$19 million, respectively.
Intangible Assets Not Subject to Amortization
The details of our intangible assets not subject to amortization are set forth below:
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| | in millions |
| | | |
| Spectrum licenses | $ | 1,051.0 | | | $ | 1,050.9 | |
| Cable television franchise rights | 540.0 | | | 540.0 | |
| Other | 1.8 | | | 1.5 | |
| Total intangible assets not subject to amortization | $ | 1,592.8 | | | $ | 1,592.4 | |
Intangible Assets Subject to Amortization, Net
The details of our intangible assets subject to amortization and the related accumulated amortization are set forth below:
| | | September 30,
2021 | | December 31,
2020 | | March 31,
2022 | | December 31,
2021 |
| | | in millions | | in millions |
| | Gross carrying amount: | | Gross carrying amount: | |
| Customer relationships | Customer relationships | $ | 1,645.3 | | | $ | 1,554.8 | | Customer relationships | $ | 1,523.9 | | | $ | 1,527.6 | |
| Licenses and other | Licenses and other | 284.4 | | | 159.4 | | Licenses and other | 215.0 | | | 220.2 | |
| 1,929.7 | | | 1,714.2 | | |
| Total gross carrying amount | | Total gross carrying amount | 1,738.9 | | | 1,747.8 | |
| Accumulated amortization | Accumulated amortization | (1,054.1) | | | (855.3) | | Accumulated amortization | (1,004.3) | | | (959.2) | |
| Total | $ | 875.6 | | | $ | 858.9 | | |
| Net carrying amount | | Net carrying amount | $ | 734.6 | | | $ | 788.6 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
(8) Assets Held for Sale
On September 29, 2021, we entered into an agreement with América Móvil to contribute the Chile JV Entities to América Móvil’s Chilean operations to form the Chile JV that will be owned 50:50 by Liberty Latin America and América Móvil. The consummation of the transaction is subject to certain customary closing conditions, including regulatory approvals, and is expected to close in the second half of 2022.
In connection with this transaction, we will make a balancing payment to América Móvil of CLP 73 billion ($0.1 billion equivalent). The transaction will not trigger a change of control under VTR’s debt agreements, and is not subject to Liberty Latin America or América Móvil shareholder approvals. Following completion of the transaction, we expect to account for our 50% interest in the Chile JV as an equity method investment.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
Effective with the agreement to form the Chile JV, we began accounting for the Chile JV Entities as held for sale. Accordingly, we ceased to depreciate the long-lived assets and amortization or right of use assets of the Chile JV Entities. We have not presented the Chile JV Entities as a discontinued operation, as this transaction does not represent a strategic shift that will have a major effect on our financial results or operations. The carrying amounts of the major classes of assets and liabilities that are classified as held for sale at September 30, 2021March 31, 2022 are summarized below (in millions):
| | | | | |
Assets: | |
Cash and cash equivalents (a) | $ | 154.0 | |
Other current assets, net (b) | 125.9 |
Property and equipment, net | 680.7 |
Goodwill | 329.1 |
Other assets, net (b) | 252.5 |
Total assets | $ | 1,542.2 | |
| |
Liabilities: | |
Current portion of debt | $ | 86.4 | |
Other accrued and current liabilities (c) | 295.2 |
Long-term debt | 1,415.6 |
Other long-term liabilities (c) | 39.7 |
Total liabilities | $ | 1,836.9 | |
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| in millions |
| Assets: | | | |
| Cash and cash equivalents (a) | $ | 66.8 | | | $ | 109.7 | |
| Other current assets, net (b) | 127.0 | | | 132.6 |
| Property and equipment, net | 789.8 | | | 686.0 |
| Goodwill | 339.6 | | | 313.0 |
| Other assets, net (b) | 165.5 | | | 327.4 |
| Total assets | $ | 1,488.7 | | | $ | 1,568.7 | |
| | | |
| Liabilities: | | | |
| Current portion of debt | $ | 89.1 | | | $ | 82.2 | |
| Other accrued and current liabilities (c) | 300.5 | | | 294.2 |
| Long-term debt | 1,416.9 | | | 1,416.8 |
| Other long-term liabilities (c) | 55.5 | | | 60.9 |
| Total liabilities | $ | 1,862.0 | | | $ | 1,854.1 | |
(a)Amount excludesAmounts exclude certain cash and cash equivalent balances of the Chile JV Entities that will be retained by Liberty Latin America is able to retain upon the formation of the Chile JV and are therefore not classified as held for sale.
(b)Other current assets, net includes $11 million and $27 million, respectively, and other assets, net, include $17includes $119 million and $202$277 million, respectively, related to derivative assets.
(c)Other accrued and current liabilities includes $23 million and $16 million, respectively, and other long-term liabilities include $21includes $2 million and $1 million, respectively,at each period related to derivative liabilities.
Our condensed consolidated statements of operations include earnings (loss) lossesbefore income taxes attributable to the Chile JV Entities of $159$76 million and ($65 million)$22 million for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, and $200 million and ($106 million) for the nine months ended September 30, 2021 and 2020, respectively.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
(9) Debt and Finance Lease Obligations
In connection with the pending formation of the Chile JV, the outstanding third-party debt and vendor financing of the Chile JV Entities has been reflected in liabilities associated with assets held for sale on our condensed consolidated balance sheets. For information regarding the pending formation of the Chile JV and the held-for-sale presentation of the Chile JV Entities, see note 8.
The U.S. dollar equivalents of the components of our debt are as follows:
| | | | September 30, 2021 | | Estimated fair value (c) | | Principal amount | | March 31, 2022 | | Estimated fair value (c) | | Principal amount |
| | Weighted
average
interest
rate (a) | | Unused borrowing capacity (b) | | | Weighted
average
interest
rate (a) | | Unused borrowing capacity (b) | |
| | Borrowing currency | | US $ equivalent | | September 30,
2021 | | December 31, 2020 | | September 30,
2021 | | December 31, 2020 | | Borrowing currency | | US $ equivalent | | March 31,
2022 | | December 31, 2021 | | March 31,
2022 | | December 31, 2021 |
| | | | | in millions | | | | in millions |
| | Convertible Notes (d) | Convertible Notes (d) | 2.00 | % | | — | | | $ | — | | | $ | 408.1 | | | $ | 381.8 | | | $ | 402.5 | | | $ | 402.5 | | Convertible Notes (d) | 2.00 | % | | — | | | $ | — | | | $ | 368.9 | | | $ | 396.5 | | | $ | 402.5 | | | $ | 402.5 | |
| C&W Notes | C&W Notes | 6.74 | % | | — | | | — | | | 2,377.9 | | | 2,435.8 | | | 2,270.0 | | | 2,270.0 | | C&W Notes | 6.55 | % | | — | | | — | | | 1,707.8 | | | 1,774.3 | | | 1,715.0 | | | 1,715.0 | |
| C&W Credit Facilities | C&W Credit Facilities | 2.75 | % | | (e) | | 790.0 | | | 1,832.6 | | | 1,834.7 | | | 1,853.4 | | | 1,856.2 | | C&W Credit Facilities | 3.12 | % | | (e) | | 794.5 | | | 2,420.8 | | | 2,422.7 | | | 2,455.3 | | | 2,451.3 | |
| LPR Senior Secured Notes | LPR Senior Secured Notes | 6.12 | % | | — | | | — | | | 2,217.8 | | | 1,389.4 | | | 2,110.0 | | | 1,290.0 | | LPR Senior Secured Notes | 6.08 | % | | — | | | — | | | 1,975.1 | | | 2,058.1 | | | 1,981.0 | | | 1,981.0 | |
| LPR Credit Facilities | LPR Credit Facilities | 3.83 | % | | $ | 167.5 | | | 167.5 | | | 500.6 | | | 1,002.5 | | | 500.0 | | | 1,000.0 | | LPR Credit Facilities | 4.15 | % | | $ | 172.5 | | | 172.5 | | | 616.9 | | | 623.1 | | | 620.0 | | | 620.0 | |
| VTR debt | — | | | (f) | | (f) | | (f) | | 1,483.5 | | | (f) | | 1,394.5 | | |
| Cabletica Credit Facilities (g) | 7.26 | % | | $ | 7.0 | | | 7.0 | | | 409.6 | | | 119.3 | | | 411.7 | | | 119.6 | | |
| Vendor financing (f) (h) | 2.66 | % | | — | | | — | | | 82.0 | | | 168.1 | | | 82.0 | | | 168.1 | | |
| Costa Rica Credit Facilities (f) | | Costa Rica Credit Facilities (f) | 7.23 | % | | $ | 7.0 | | | 7.0 | | | 400.0 | | | 407.1 | | | 404.1 | | | 408.7 | |
| Vendor financing (g) | | Vendor financing (g) | 2.99 | % | | — | | | — | | | 117.7 | | | 99.8 | | | 117.7 | | | 99.8 | |
| Total debt before premiums, discounts and deferred financing costs | Total debt before premiums, discounts and deferred financing costs | 5.14 | % | | $ | 964.5 | | | $ | 7,828.6 | | | $ | 8,815.1 | | | $ | 7,629.6 | | | $ | 8,500.9 | | Total debt before premiums, discounts and deferred financing costs | 4.88 | % | | $ | 974.0 | | | $ | 7,607.2 | | | $ | 7,781.6 | | | $ | 7,695.6 | | | $ | 7,678.3 | |
The following table provides a reconciliation of total debt before premiums, discounts and deferred financing costs to total debt and finance lease obligations:
| | | September 30,
2021 | | December 31, 2020 | | March 31,
2022 | | December 31, 2021 |
| | in millions | | in millions |
| | Total debt before premiums, discounts and deferred financing costs | Total debt before premiums, discounts and deferred financing costs | $ | 7,629.6 | | | $ | 8,500.9 | | Total debt before premiums, discounts and deferred financing costs | $ | 7,695.6 | | | $ | 7,678.3 | |
| Premiums, discounts and deferred financing costs, net | Premiums, discounts and deferred financing costs, net | (123.2) | | | (157.1) | | Premiums, discounts and deferred financing costs, net | (113.6) | | | (120.0) | |
| Total carrying amount of debt | Total carrying amount of debt | 7,506.4 | | | 8,343.8 | | Total carrying amount of debt | 7,582.0 | | | 7,558.3 | |
| Finance lease obligations | Finance lease obligations | 12.3 | | | 13.4 | | Finance lease obligations | 11.8 | | | 7.6 | |
| Total debt and finance lease obligations | Total debt and finance lease obligations | 7,518.7 | | | 8,357.2 | | Total debt and finance lease obligations | 7,593.8 | | | 7,565.9 | |
| Less: Current maturities of debt and finance lease obligations | Less: Current maturities of debt and finance lease obligations | (75.6) | | | (161.9) | | Less: Current maturities of debt and finance lease obligations | (117.8) | | | (106.3) | |
| Long-term debt and finance lease obligations | Long-term debt and finance lease obligations | $ | 7,443.1 | | | $ | 8,195.3 | | Long-term debt and finance lease obligations | $ | 7,476.0 | | | $ | 7,459.6 | |
(a)Represents the weighted average interest rate in effect at September 30, 2021March 31, 2022 for all borrowings outstanding (excluding those of the Chile JV Entities) pursuant to each debt instrument, including any applicable margin. The interest rates presented represent stated rates and do not include the impact of derivative instruments, deferred financing costs, original issue premiums or discounts and commitment fees, all of which affect our overall cost of borrowing.
(b)Unused borrowing capacity represents the maximum availability under the applicable facility at September 30, 2021March 31, 2022 without regard to covenant compliance calculations or other conditions precedent to borrowing. At September 30, 2021,March 31, 2022, the full amount of unused borrowing capacity was available to be borrowed under each of the respective subsidiary facilities, including VTR, both before and after completion of the September 30, 2021March 31, 2022 compliance reporting requirements. At September 30, 2021,March 31, 2022, except as may be limited by tax and legal considerations, the presence of noncontrolling interests,
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
foreign currency exchange restrictions with respect to certain C&W subsidiaries and other factors, there were no restrictions on the respective subsidiary’s ability to upstream cash from this availability to Liberty Latin America or its subsidiaries or other equity holders.
Liberty Latin America Ltd.
holders, other than VTR’s that is limited to approximately CLP 81 billion ($103 million) under the terms of the 2028 VTR Senior Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
indenture.(c)The estimated fair values of our debt instruments are determined using the applicable bid prices (mostly Level 1 of the fair value hierarchy) or from quoted prices for similar instruments in active markets adjusted for the estimated credit spreads of the applicable entity, to the extent available, and other relevant factors (Level 2 of the fair value hierarchy). For additional information regarding fair value hierarchies, see note 6.
(d)The interest rate reflects the stated rate of the Convertible Notes. The effective interest rate of the Convertible Notes is 6.7%, which considers the impact of a discount recorded in connection with the value ascribed to the instrument’s conversion option. At September 30, 2021,March 31, 2022, the carrying value of the Convertible Notes was $354$362 million and the unamortized debt discount on the Convertible Notes was $46$39 million.
(e)The C&W Credit Facilities unused borrowing capacity comprise certain U.S. dollar andTrinidad & Tobago dollar and Jamaican dollar revolving credit facilities.
(f)In connection with the pending formation of the Chile JV, the outstanding third-party debt and vendor financing of the Chile JV Entities has been reflected in liabilities associated with assets held for sale on our September 30, 2021 condensed consolidated balance sheet. For information regarding the pending formation of the Chile JV and the held-for-sale presentation of the Chile JV Entities, see note 8.
(g)The CableticaCosta Rica Credit Facilities comprise certain Costa Rican colón and U.S. dollar term loans and a U.S. dollar revolving credit facility.
(h)(g)Represents amounts owed pursuant to interest-bearing vendor financing arrangements that are used to finance certain of our operating expenses and property and equipment additions. These obligations are generally due within one year and include VAT that were paid on our behalf by the vendor. Our operating expenses include $82$32 million and $78$26 million for the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively, that were financed by an intermediary and are reflected on the borrowing date as a cash outflow within net cash provided by operating activities and a cash inflow within net cash provided by financing activities in our condensed consolidated statements of cash flows. Repayments of vendor financing obligations are included in payments of principal amounts of debt and finance lease obligations in our condensed consolidated statements of cash flows.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
Financing Activity
The general terms of theBorrowings related to significant notes we issued and credit facilities we drew down, entered into or amended during the three months ended March 31, 2022 and 2021, including activity related to the Chile JV Entities, are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Borrowing group | | | | Issued at | | | | Interest rate | | Borrowing | | Non-cash component (a) |
| Instrument | | | Maturity | | | Borrowing currency | | USD equivalent | |
| | | | | | | | | | in millions |
| | | | | | | | | | | | | | | |
| C&W | | C&W Revolving Credit Facility | | N/A | | January 30, 2027 | | LIBOR + 3.25% | | | (b) | | $ | — | |
| | | | | | | | | | | | | | | |
| Liberty Puerto Rico | | 2029 LPR Senior Secured Notes | | 100% | | July 15, 2029 | | 5.125% | | | $ | 820.0 | | | $ | 820.0 | | | $ | 500.0 | |
| Liberty Puerto Rico | | 2028 LPR Term Loan | | 100% | | October 15, 2028 | | LIBOR + 3.75% | | | $ | 500.0 | | | $ | 500.0 | | | $ | 500.0 | |
| Liberty Puerto Rico | | LPR Revolving Credit Facility | | N/A | | March 15, 2027 | | LIBOR + 3.5% | | | (c) | | $ | — | |
| | | | | | | | | | | | | | | |
| VTR | | 2029 VTR Senior Secured Notes | | 100% | | April 15, 2029 | | 4.375% | | | $ | 410.0 | | | $ | 410.0 | | | $ | 60.0 | |
| VTR | | VTR RCF – A | | N/A | | June 15, 2026 | | TAB + 3.35% | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | |
| Costa Rica (d) | | Cabletica Term Loan B-1 Facility | | 100% | | August 1, 2024 | | LIBOR + 5.50% (e) | | | $ | 227.5 | | | $ | 227.5 | | | $ | — | |
| Costa Rica (d) | | Cabletica Term Loan B-2 Facility | | 100% | | August 1, 2024 | | TBP + 6.75% | | CRC | 36,457.9 | | | $ | 58.8 | | N/A | $ | — | |
(a)Representsincluded in the non-cash component of the financing, if any.table below. Non-cash activity relates to cash borrowed that did not pass through our bank accounts, as financing proceeds from the issuance of debt were used to directly repay some or all of outstanding debt instruments within the same borrowing group.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Borrowing group | | Instrument | | Issued at | | Maturity | | Interest rate | | Principal amount borrowed | | Non-cash component |
| | | | | | | | | | | | in millions |
| | | | | | | | | | | | | | |
| 2022 | | C&W | | 2028 CWP Term Loan A | | 100% | | January 18, 2028 | | 4.25% | | $ | 275.0 | | | $ | 272.9 | |
| 2022 | | C&W | | 2028 CWP Term Loan B (a) | | 100% | | January 18, 2028 | | 4.25% | | $ | — | | | $ | — | |
| 2022 | | C&W | | CWP Revolving Credit Facility (b) | | 100% | | January 18, 2027 | | 3.75% | | $ | — | | | N/A |
| | | | | | | | | | | | | | |
| 2021 | | Liberty Puerto Rico | | 2029 LPR Senior Secured Notes | | 100% | | July 15, 2029 | | 5.125% | | $ | 820.0 | | | $ | 500.0 | |
| 2021 | | Liberty Puerto Rico | | 2028 LPR Term Loan | | 100% | | October 15, 2028 | | LIBOR + 3.75% | | $ | 620.0 | | | $ | 500.0 | |
| 2021 | | Liberty Puerto Rico | | LPR Revolving Credit Facility | | N/A | | March 15, 2027 | | LIBOR + 3.50% | | (c) | | N/A |
| | | | | | | | | | | | | | |
| 2021 | | VTR | | 2029 VTR Senior Secured Notes | | 100% | | April 15, 2029 | | 4.375% | | $ | 410.0 | | | $ | 60.0 | |
| 2021 | | VTR | | VTR RCF – A | | N/A | | June 15, 2026 | | TAB + 3.35% | | $ | — | | | N/A |
N/A – Not applicable.
(a)The 2028 CWP Term Loan B is unfunded as of March 31, 2022, restricted for use to fund the Claro Panama Acquisition and is subject to certain ticking fees until the Claro Panama Acquisition closing date.
(b)In September 2021, the C&WThe CWP Revolving Credit Facility was amended to extend the maturityhas a fee on unused commitments of $580 million in underlying commitments from January 30, 2026 to January 30, 2027.0.50%.
(c)Total commitments under the LPR Revolving Credit Facility were increased by $43 million during the first quarter of 2021.
(d)Borrowings under the Cabletica Term Loan B-1 Facility and Cabletica Term Loan B-2 Facility were used to fund a portion of the Telefónica-Costa Rica Acquisition.
(e)Subject to a LIBOR floor of 75 basis points.million.
During the three months ended March 31, 2022 and 2021, we made repayments on the following debt instruments, including repaymentsactivity related to the Chile JV Entities:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Borrowing group | | | | Redemption price | | Principal amount repaid | | Non-cash component (b) | | Loss on debt extinguishment |
| Instrument | | | Borrowing currency | | USD equivalent (a) | | |
| | | | | | in millions |
| | | | | | | | | | | | | |
| Liberty Puerto Rico | | 2026 SPV Credit Facility | | 100% | | | $ | 1,000.0 | | | $ | 1,000.0 | | | $ | 1,000.0 | | | $ | 14.3 | |
| | | | | | | | | | | | | |
| VTR | | 2028 VTR Senior Secured Notes | | 103% | | | $ | 120.0 | | | $ | 120.0 | | | $ | 60.0 | | | $ | 4.0 | |
| VTR | | VTR TLB-1 Facility | | 100% | | CLP | 140,900.0 | | | $ | 196.4 | | | $ | — | | | $ | 5.6 | |
| VTR | | VTR TLB-2 Facility | | 100% | | CLP | 33,100.0 | | | $ | 46.1 | | | $ | — | | | $ | 1.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Principal amount repaid | | | | |
| Period | | Borrowing group | | Instrument | | Redemption price | | Borrowing currency | | USD equivalent (a) | | Non-cash component | | Loss on debt extinguishment |
| | | | | | | | in millions |
| | | | | | | | | | | | | | | |
| 2022 | | C&W | | CWP Credit Facilities | | 100% | | $ | 272.9 | | | $ | 272.9 | | | $ | 272.9 | | | $ | — | |
| | | | | | | | | | | | | | | |
| 2021 | | Liberty Puerto Rico | | 2026 SPV Credit Facility | | 100% | | $ | 1,000.0 | | | $ | 1,000.0 | | | $ | 1,000.0 | | | $ | 14.3 | |
| | | | | | | | | | | | | | | |
| 2021 | | VTR | | 2028 VTR Senior Secured Notes | | 103% | | $ | 60.0 | | | $ | 60.0 | | | $ | 60.0 | | | $ | 2.1 | |
| 2021 | | VTR | | VTR TLB-1 Facility | | 100% | | CLP | 140,900.0 | | | $ | 196.4 | | | $ | — | | | $ | 5.6 | |
| 2021 | | VTR | | VTR TLB-2 Facility | | 100% | | CLP | 33,100.0 | | | $ | 46.1 | | | $ | — | | | $ | 1.3 | |
(a)Translated at the transaction date, if applicable.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
(b)Represents the non-cash component of the repayment, if any. Non-cash activity relates to cash repayments that did not pass through our bank accounts, as financing proceeds from the issuance of debt were used to directly repay some or all of outstanding debt instruments within the same borrowing group.
Maturities of Debt
Maturities of our debt as of September 30, 2021March 31, 2022 are presented below. The table below excludes the debt of the Chile JV Entities as it has been reflected in liabilities associated with assets held for sale on our September 30, 2021March 31, 2022 condensed consolidated balance sheet. Amounts presented below represent U.S. dollar equivalents based on September 30, 2021March 31, 2022 exchange rates:
| | | C&W | | Liberty Puerto Rico | | Costa Rica | | Liberty Latin America (a) | | Consolidated | | C&W | | Liberty Puerto Rico | | Costa Rica | | Liberty Latin America (a) | | Consolidated |
| | in millions | | in millions |
| Years ending December 31: | Years ending December 31: | | Years ending December 31: | |
| 2021 (remainder of year) | $ | 28.2 | | | $ | — | | | $ | — | | | $ | 0.1 | | | $ | 28.3 | | |
| 2022 | 60.2 | | | — | | | — | | | 0.5 | | | 60.7 | | |
| 2022 (remainder of year) | | 2022 (remainder of year) | $ | 79.8 | | | $ | — | | | $ | — | | | $ | 0.5 | | | $ | 80.3 | |
| 2023 | 2023 | 124.7 | | | — | | | — | | | 0.6 | | | 125.3 | | 2023 | 38.2 | | | — | | | — | | | 0.6 | | | 38.8 | |
| 2024 | 2024 | 60.8 | | | — | | | 411.7 | | | 402.8 | | | 875.3 | | 2024 | 64.1 | | | — | | | 404.1 | | | 402.7 | | | 870.9 | |
| 2025 | 2025 | 144.6 | | | — | | | — | | | — | | | 144.6 | | 2025 | 1.7 | | | — | | | — | | | — | | | 1.7 | |
| 2026 | 2026 | 500.6 | | | — | | | — | | | — | | | 500.6 | | 2026 | 0.6 | | | — | | | — | | | — | | | 0.6 | |
| 2027 | | 2027 | 1,715.5 | | | 1,161.0 | | | — | | | — | | | 2,876.5 | |
| Thereafter | Thereafter | 3,284.8 | | | 2,610.0 | | | — | | | — | | | 5,894.8 | | Thereafter | 2,386.8 | | | 1,440.0 | | | — | | | — | | | 3,826.8 | |
| Total debt maturities | Total debt maturities | 4,203.9 | | | 2,610.0 | | | 411.7 | | | 404.0 | | | 7,629.6 | | Total debt maturities | 4,286.7 | | | 2,601.0 | | | 404.1 | | | 403.8 | | | 7,695.6 | |
| Premiums, discounts and deferred financing costs, net | Premiums, discounts and deferred financing costs, net | (27.3) | | | (38.3) | | | (8.8) | | | (48.8) | | | (123.2) | | Premiums, discounts and deferred financing costs, net | (32.7) | | | (32.8) | | | (7.5) | | | (40.6) | | | (113.6) | |
| Total debt | Total debt | $ | 4,176.6 | | | $ | 2,571.7 | | | $ | 402.9 | | | $ | 355.2 | | | $ | 7,506.4 | | Total debt | $ | 4,254.0 | | | $ | 2,568.2 | | | $ | 396.6 | | | $ | 363.2 | | | $ | 7,582.0 | |
| Current portion | Current portion | $ | 74.4 | | | $ | — | | | $ | — | | | $ | 0.4 | | | $ | 74.8 | | Current portion | $ | 115.9 | | | $ | — | | | $ | — | | | $ | 0.5 | | | $ | 116.4 | |
| Noncurrent portion | Noncurrent portion | $ | 4,102.2 | | | $ | 2,571.7 | | | $ | 402.9 | | | $ | 354.8 | | | $ | 7,431.6 | | Noncurrent portion | $ | 4,138.1 | | | $ | 2,568.2 | | | $ | 396.6 | | | $ | 362.7 | | | $ | 7,465.6 | |
(a)Represents the amount held by Liberty Latin America on a standalone basis plus the aggregate amount held by subsidiaries of Liberty Latin America that are outside our borrowing groups.
Subsequent Event
In October 2021, we entered into the C&W Term Loan B-6 Facility. Interest is payable quarterly on the C&W Term Loan B-6 Facility. The net proceeds from the C&W Term Loan B-6 Facility were primarily used to (i) redeem in full, $500 million of aggregate principal amount under the 2026 C&W Senior Notes at a redemption price of 103.75% and (ii) redeem $55 million of aggregate principal amount under the 2027 C&W Senior Secured Notes at a redemption price of 103.0%.
(10) Leases
The following table provides details of our operating lease expense:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
| in millions |
| | | | | | | |
| Operating lease expense: | | | | | | | |
| Operating lease cost | $ | 25.6 | | | $ | 10.3 | | | $ | 66.1 | | | $ | 32.9 | |
| Short-term lease cost | 5.3 | | | 3.5 | | | 15.2 | | | 9.7 | |
| Total operating lease expense | $ | 30.9 | | | $ | 13.8 | | | $ | 81.3 | | | $ | 42.6 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
| | | | | | | | | | | | | | | |
| | | Three months ended March 31, |
| | | | | 2022 | | 2021 |
| | | | | in millions |
| Operating lease expense: | | | | | | | |
| Operating lease cost | | | | | $ | 27.3 | | | $ | 21.9 | |
| Short-term lease cost | | | | | 5.9 | | | 4.0 | |
| Total operating lease expense | | | | | $ | 33.2 | | | $ | 25.9 | |
Our operating lease expense is included in facility, provision, franchise and other expense, in other operating costs and expenses, in our condensed consolidated statements of operations.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
Certain other details of our operating leases are set forth in the tables below:
| | | September 30, 2021 | | December 31,
2020 | | March 31, 2022 | | December 31,
2021 |
| | in millions | | in millions |
| | Operating lease right-of-use assets | Operating lease right-of-use assets | $ | 385.5 | | | $ | 328.6 | | Operating lease right-of-use assets | $ | 427.3 | | | $ | 441.0 | |
| Operating lease liabilities: | Operating lease liabilities: | | | | Operating lease liabilities: | | | |
| Current | Current | $ | 78.9 | | | $ | 63.2 | | Current | $ | 78.8 | | | $ | 82.0 | |
| Noncurrent | Noncurrent | 320.0 | | | 269.7 | | Noncurrent | 360.9 | | | 371.0 | |
| Total operating lease liabilities | Total operating lease liabilities | $ | 398.9 | | | $ | 332.9 | | Total operating lease liabilities | $ | 439.7 | | | $ | 453.0 | |
| | Weighted-average remaining lease term | | Weighted-average remaining lease term | 7.4 years | | 7.5 years |
| | Weighted-average discount rate | | Weighted-average discount rate | 6.5 | % | | 6.2 | % |
| | | | | | | | | | | |
| Weighted-average remaining lease term | 6.8 years | | 7.2 years |
| | | |
| Weighted-average discount rate | 7.3 | % | | 5.6 | % |
| | | | | | | | | | | | | |
| Nine months ended
September 30, |
| 2021 | | 2020 | | |
| in millions |
| | | | | |
| Operating cash outflows related to operating leases | $ | 63.6 | | | $ | 29.1 | | | |
| Right-of-use assets obtained in exchange for new operating lease liabilities (a) | $ | 138.9 | | | $ | 23.0 | | | |
| | | | | | | | | | | | | |
| Three months ended March 31, |
| 2022 | | 2021 | | |
| in millions |
| | | | | |
| Operating cash outflows related to operating leases | $ | 32.1 | | | $ | 20.3 | | | |
| Right-of-use assets obtained in exchange for new operating lease liabilities (a) | $ | 13.6 | | | $ | 10.3 | | | |
(a)Represents non-cash transactions associated with operating leases entered into during the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively, including $117 million acquired in connection with the Telefónica-Costa Rica Acquisition.respectively.
Our operating lease right-of-use assets are included in other assets, net, and our noncurrent operating lease liabilities are included in other long-term liabilities in our condensed consolidated balance sheets.
Maturities of Operating Leases
Maturities of our operating lease liabilities as of September 30, 2021March 31, 2022 are presented below. The table below excludes the operating lease liabilities of the Chile JV Entities as they have been reflected in liabilities associated with assets held for sale on our September 30, 2021March 31, 2022 condensed consolidated balance sheet. Amounts presented below represent U.S. dollar equivalents (in millions) based on September 30, 2021March 31, 2022 exchange rates.
| | Years ending December 31: | Years ending December 31: | | Years ending December 31: | |
| 2021 (remainder of year) | $ | 23.7 | | |
| 2022 | 90.6 | | |
| 2022 (remainder of year) | | 2022 (remainder of year) | $ | 69.6 | |
| 2023 | 2023 | 77.5 | | 2023 | 87.7 | |
| 2024 | 2024 | 68.4 | | 2024 | 78.1 | |
| 2025 | 2025 | 60.8 | | 2025 | 70.3 | |
| 2026 | 2026 | 51.5 | | 2026 | 60.5 | |
| 2027 | | 2027 | 46.8 | |
| Thereafter | Thereafter | 134.2 | | Thereafter | 138.0 | |
| Total operating lease liabilities on an undiscounted basis | Total operating lease liabilities on an undiscounted basis | 506.7 | | Total operating lease liabilities on an undiscounted basis | 551.0 | |
| Present value discount | Present value discount | (107.8) | | Present value discount | (111.3) | |
| Present value of operating lease liabilities | Present value of operating lease liabilities | $ | 398.9 | | Present value of operating lease liabilities | $ | 439.7 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
(11) Unfulfilled Performance Obligations
We enter into certain long-term capacity contracts with customers where the customer either pays a fixed fee over time or prepays for the capacity upfront and pays a portion related to operating and maintenance of the network over time. We assess whether prepaid capacity contracts contain a significant financing component. If the financing component is significant, interest expense is accreted over the life of the contract using the effective interest method. The revenue associated with prepaid capacity contracts is deferred and generally recognized on a straight-line basis over the life of the contract. As of September 30, 2021,March 31, 2022, we have approximately $375$351 million of unfulfilled performance obligations relating to our long-term capacity contracts, primarily subsea contracts, that generally will be recognized as revenue over a weightedan average remaining life of six years.
(12) Programming and Other Direct Costs of Services
Programming and other direct costs of services include programming and copyright costs, interconnect and access costs, equipment costs, which primarily relate to costs of mobile handsets and other devices, and other direct costs related to our operations.
Our programming and other direct costs of services by major category are set forth below:
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions | | | in millions |
| | Programming and copyright | Programming and copyright | $ | 108.5 | | | $ | 96.0 | | | $ | 334.7 | | | $ | 289.5 | | Programming and copyright | | $ | 109.3 | | | $ | 111.8 | |
| Interconnect | Interconnect | 69.7 | | | 58.2 | | | 201.9 | | | 183.3 | | Interconnect | | 85.7 | | | 80.6 | |
Equipment and other | Equipment and other | 112.8 | | | 35.5 | | | 310.3 | | | 107.4 | | Equipment and other | | 107.2 | | | 91.3 | |
| Total programming and other direct costs of services | Total programming and other direct costs of services | $ | 291.0 | | | $ | 189.7 | | | $ | 846.9 | | | $ | 580.2 | | Total programming and other direct costs of services | | $ | 302.2 | | | $ | 283.7 | |
(a)Amounts for the three months ended March 31, 2022 and 2021 include $85 million and $72 million, respectively, related to equipment cost of goods sold.
(13) Other Operating Costs and Expenses
Other operating costs and expenses set forth in the table below comprise the following cost categories:
•Personnel and contract labor-related costs, which primarily include salary-related and cash bonus expenses, net of capitalizable labor costs, and temporary contract labor costs;
•Network-related expenses, which primarily include costs related to network access, system power, core network, and CPE repair, maintenance and test costs;
•Service-related costs, which primarily include professional services, information technology-related services, audit, legal and other services;
•Commercial, which primarily includes sales and marketing costs, such as advertising, commissions and other sales and marketing-related costs, and customer care costs related to outsourced call centers;
•Facility, provision, franchise and other, which primarily includes facility-related costs, provision for bad debt expense, franchise-related fees, bank fees, insurance, vehicle-related, travel and entertainment and other operating-related costs; and
•Share-based compensation expense that relates to (i) equity awards issued to our employees and Directors and (ii) certain bonus-related expenses that will beare paid in the form of equity.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
Our other operating costs and expenses by major category are set forth below:
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions | | | in millions |
| | Personnel and contract labor | Personnel and contract labor | $ | 142.9 | | | $ | 113.9 | | | $ | 425.1 | | | $ | 351.6 | | Personnel and contract labor | | $ | 153.2 | | | $ | 138.4 | |
| Network-related | Network-related | 85.0 | | | 66.4 | | | 242.8 | | | 193.2 | | Network-related | | 82.6 | | | 79.0 | |
| Service-related | Service-related | 47.4 | | | 35.2 | | | 140.2 | | | 110.0 | | Service-related | | 51.2 | | | 47.5 | |
| Commercial | Commercial | 57.4 | | | 38.8 | | | 163.5 | | | 120.3 | | Commercial | | 65.5 | | | 52.4 | |
| Facility, provision, franchise and other | Facility, provision, franchise and other | 122.2 | | | 83.3 | | | 342.0 | | | 255.4 | | Facility, provision, franchise and other | | 123.8 | | | 114.9 | |
| Share-based compensation expense | Share-based compensation expense | 33.1 | | | 28.0 | | | 88.9 | | | 75.3 | | Share-based compensation expense | | 30.0 | | | 23.0 | |
| Total other operating costs and expenses | Total other operating costs and expenses | $ | 488.0 | | | $ | 365.6 | | | $ | 1,402.5 | | | $ | 1,105.8 | | Total other operating costs and expenses | | $ | 506.3 | | | $ | 455.2 | |
(14) Income Taxes
We evaluate and update our estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. For interim tax reporting, we estimate an annual effective tax rate that is applied to year-to-date ordinary income or loss. The tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.
Our interim estimate of our annual effective tax rate and our interim tax provision are subject to volatility due to factors such as jurisdictions in which our deferred taxes and/or tax attributes are subject to a full valuation allowance, relative changes in unrecognized tax benefits and changes in tax laws. Based upon the mix and timing of our actual annual earnings or loss compared to annual projections, as well as changes in the factors noted above, our effective tax rate may vary quarterly and may make quarterly comparisons not meaningful.
Income tax benefit (expense)expense was ($39 million)$24 million and $43$30 million during the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, and ($105 million) and $33 million during the nine months ended September 30, 2021 and 2020, respectively. This represents an effective income tax rate of (34.6%(20.1%) and (32.2%(24.5%) for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, and (39.0%) and (4.1%) for the nine months ended September 30, 2021 and 2020, respectively, including items treated discretely.
For the three and nine months ended September 30, 2021,March 31, 2022, the income tax expense attributable to our earnings before income taxes differs from the amounts computed using the statutory tax rate, primarily due to the net detrimental effects of international rate differences, net increases in valuation allowances, and negative effects of permanent tax differences, such as non-deductible expenses, and inclusion of withholding taxes on cross-border payments.expenses. These negative impacts to our effective tax rate were partially offset by the beneficial effects of permanent tax differences, such as non-taxable income.
For the three months ended September 30,March 31, 2021, the income tax expense reflects net favorable changes in uncertain tax positions. For the nine months ended September 30, 2021, income tax expense reflects net unfavorable changes in uncertain tax positions.
For the three and nine months ended September 30, 2020, the income tax benefit attributable to our lossearnings before income taxes differs from the amounts computed using the statutory tax rate,primarily due to the beneficialnet detrimental effects of international rate differences, net favorableincreases in valuation allowances, changes in uncertain tax positions, and negative effects of permanent items,tax differences, such as non-taxable income.non-deductible expenses. These beneficialnegative impacts to our effective tax rate were partially offset by the negativebeneficial effects of increases in valuation allowances, permanent items,tax differences, such as non-deductible goodwill impairment and other non-deductible expenses, as well as the inclusion of withholding taxes on cross-border payments. For the three and nine months ended September 30, 2020, we satisfied requirements imposed under recent tax reforms and, as a result, reduced our uncertain tax positions by $20 million. Additionally, during the nine months ended September 30, 2020, we closed certain tax audits and, as a result, reduced our uncertain tax positions by $18 million. These amounts have been reflected as discrete tax benefits in our condensed consolidated statement of operations.non-taxable income.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
(15) Share-based Compensation
Share-based Incentive Awards
The following tables summarize the share-based incentive awards related to Liberty Latin America Class A and Class C common shares held by our employees and our Directors as of September 30, 2021.
| | | | | | | | | | | | | |
| Number of
shares | | Weighted average exercise price | | |
| Share-based incentive award type | | | | | |
| SARs: | | | | | |
| Class A common shares: | | | | | |
| Outstanding | 6,491,094 | | | $ | 16.16 | | | |
| Exercisable | 2,781,882 | | | $ | 19.58 | | | |
| Class C common shares: | | | | | |
| Outstanding | 12,971,448 | | | $ | 16.21 | | | |
| Exercisable | 5,553,395 | | | $ | 19.63 | | | |
| | | | | | | |
| Number of
shares | | |
Share-based incentive award type | | | |
RSUs outstanding: | | | |
Class A common shares | 1,172,984 | | | |
Class C common shares | 2,345,707 | | | |
PSUs outstanding: | | | |
Class A common shares | 754,044 | | | |
Class C common shares | 1,573,623 | | | |
The following tables summarize the share-based incentive awards related to Liberty Latin America Class A and Class C common shares granted to our employees and our Directors during the nine months ended September 30, 2021.
| | | | | | | | | | | | | | | | | |
| Number of
shares | | Weighted average exercise price | | Weighted average grant date fair value |
| Share-based incentive award type | | | | | |
| SARs granted: | | | | | |
| Class A common shares | 1,922,255 | | | $ | 13.97 | | | $ | 6.44 | |
| Class C common shares | 3,844,510 | | | $ | 14.07 | | | $ | 6.43 | |
| PSARs granted (2021 PSARs): | | | | | |
| Class A common shares | 2,733,325 | | | $ | 13.98 | | | $ | 6.90 | |
| Class C common shares | 5,466,675 | | | $ | 14.08 | | | $ | 6.87 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
| | | | | | | | | | | |
| Number of
shares | | Weighted average grant-date fair value |
| Share-based incentive award type | | | |
| RSUs granted: | | | |
| Class A common shares (a) | 1,548,992 | | | $ | 13.88 | |
| Class C common shares (a) | 3,204,589 | | | $ | 14.00 | |
| PSUs granted (2020 PSUs): | | | |
| Class A common shares | 645,704 | | | $ | 11.76 | |
| Class C common shares | 1,347,552 | | | $ | 11.48 | |
(a) During March 2021, we granted 0.6 million and 1.2 million shares of Class A and Class C RSUs, respectively, that vested immediately in settlement of certain bonus liabilities relating to the year ended December 31, 2020, which are included in the amounts presented in the table.
2021 PSARs
During 2021, certain key employees received a one-time grant of PSARs (the 2021 PSARs). Each award represents the right to receive a payment in shares or, if the compensation committee so determines, cash or a combination of cash and shares, equal to the excess of the fair market value of the common shares on the day of exercise over the exercise price, subject to performance and vesting. The 2021 PSARs, have a term of ten years, a performance period from January 1, 2021 and ending December 31, 2023 and will vest on March 16, 2024 based on the continued employment of the recipient through this date. The 2021 PSARs have performance conditions based on the achievement of individual objectives during the performance period. These objectives consist of qualitative measures.
2020 PSUs
In early 2020, our compensation committee approved target annual equity awards (the 2020 PSUs) to be granted to executive officers and certain other employees. The initial targets for the annual equity awards were identical to the 2019 targets. Because of the COVID-19 pandemic, and the difficulty in providing clarity on our then expected results over a two-year performance period for the 2020 PSUs, the compensation committee determined in July 2020 to delay the setting of the performance target for the 2020 PSUs so that the compensation committee would have better visibility of the impacts of the pandemic on the long-range plans for Liberty Latin America. As a result of this delay in setting the performance targets, no targets were communicated to award recipients, and as such, a grant date for accounting purposes was not considered to have occurred. On February 19, 2021, in light of the ongoing COVID-19 pandemic, the compensation committee reevaluated, reset and communicated the financial and operational targets for earning the 2020 PSUs thereby establishing a grant date for the 2020 PSUs. Each of the 2020 PSUs represents the right to receive one Liberty Latin America Class A or Class C common share, as applicable, subject to achievement of certain performance criteria and a time-based vesting period. The performance criteria is based upon the achievement of operating cash flow, defined as operating income before depreciation and amortization, share-based compensation, provisions and provision releases related to significant litigation, and impairment, restructuring and other operating items, as adjusted for events such as acquisitions, dispositions and changes in foreign currency exchange rates and accounting principles or policies that affect comparability (OCF), during the period from January 1, 2021 through December 31, 2021. Additionally, the 2020 PSUs provide for an over- and under-performance payout ranging from 0% to 150% should the OCF, as adjusted, exceed or fail to meet the target, as applicable. The earned 2020 PSUs will vest 50% on each of March 15, 2022 and September 15, 2022.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
(1615) Earnings or Loss perPer Share
Basic EPS is computed by dividing net earnings or loss attributable to Liberty Latin America shareholders by the weighted average number of Liberty Latin America Shares outstanding during the periods presented, as further described below. Diluted EPS presents the dilutive effect, if any, on a per share basis of potential shares as if they had been exercised, vested or converted at the beginning of the periods presented.
The details of our weighted average shares outstanding are set forth below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| Weighted average shares outstanding: | | | | | | | |
| Basic | 232,801,996 | | | 185,380,797 | | | 233,059,215 | | | 183,286,840 | |
| Diluted | 253,429,864 | | | 185,380,797 | | | 233,871,985 | | | 183,286,840 | |
| | | | | | | | | | | | | | | |
| | | | Three months ended March 31, |
| | | | | | 2022 | | 2021 |
| Weighted average shares outstanding: | | | | | | | |
| Basic | | | | | 228,274,215 | | | 232,410,514 | |
| Diluted | | | | | 249,501,352 | | | 252,970,163 | |
We reported net lossesearnings attributable to Liberty Latin America shareholders during the three and nine months ended September 30, 2020. The potentially dilutive effect at September 30, 2020 of the following items was not included in the computation of diluted loss per share for such periods because their inclusion would have been anti-dilutive to the computation or, in the case of certain PSUs, because such awards had not yet met the applicable performance criteria: (i) the aggregate number of shares issuable pursuant to outstanding options, SARsMarch 31, 2022 and RSUs of 19.4 million, (ii) the aggregate number of shares issuable pursuant to outstanding PSUs of 1.5 million and (iii) using the if-converted method, the aggregate number of shares potentially issuable under our Convertible Notes of 19.5 million.
2021, respectively. The details of the calculations of our basic and diluted EPS for the three and nine months ended September 30,March 31, 2022 and 2021 are set forth below in millions, except for share amounts:
| | | Three months ended | | Nine months ended | | | Three months ended March 31, |
| | September 30, 2021 | | September 30, 2021 | | | 2022 | | 2021 |
| | Numerator: | Numerator: | | Numerator: | | |
| Net earnings attributable to holders of Liberty Latin America Shares (basic EPS computation) | Net earnings attributable to holders of Liberty Latin America Shares (basic EPS computation) | $ | 78.2 | | | $ | 170.4 | | Net earnings attributable to holders of Liberty Latin America Shares (basic EPS computation) | | $ | 83.6 | | | $ | 89.1 | |
| Incremental income upon conversion of the Convertible Notes (if-converted method) | 6.0 | | — | | |
| Add back: interest expense and amortization of deferred financing costs and premiums associated with Convertible Notes (if-converted method) | | Add back: interest expense and amortization of deferred financing costs and premiums associated with Convertible Notes (if-converted method) | | 6.1 | | | 5.9 | |
| Net earnings attributable to holders of Liberty Latin America Shares (diluted EPS computation) | Net earnings attributable to holders of Liberty Latin America Shares (diluted EPS computation) | $ | 84.2 | | | $ | 170.4 | | Net earnings attributable to holders of Liberty Latin America Shares (diluted EPS computation) | | $ | 89.7 | | | $ | 95.0 | |
| Denominator: | Denominator: | | | | Denominator: | | | | |
| Weighted average shares (basic EPS computation) | Weighted average shares (basic EPS computation) | 232,801,996 | | | 233,059,215 | | Weighted average shares (basic EPS computation) | | 228,274,215 | | | 232,410,514 | |
| Incremental shares attributable to the release of PSUs, RSUs and SARs upon vesting (treasury stock method) | 1,134,189 | | | 812,770 | | |
| Incremental shares attributable to the conversion of the Convertible Notes (if-converted method) (a) | 19,493,679 | | | — | | |
| Weighted average shares (diluted EPS computation) (b) | 253,429,864 | | | 233,871,985 | | |
| Incremental shares attributable to an employee stock purchase plan and the release of PSUs and RSUs upon vesting (treasury stock method) | | Incremental shares attributable to an employee stock purchase plan and the release of PSUs and RSUs upon vesting (treasury stock method) | | 1,733,458 | | | 1,065,970 | |
| Number of shares issuable under our Convertible Notes (if-converted method) (a) | | Number of shares issuable under our Convertible Notes (if-converted method) (a) | | 19,493,679 | | | 19,493,679 | |
| Weighted average shares (diluted EPS computation) (b) (c) | | Weighted average shares (diluted EPS computation) (b) (c) | | 249,501,352 | | | 252,970,163 | |
(a)The Capped Calls provide an economic hedge to reduce or offset potential dilution to our Class C common shares upon any conversion of the Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of such converted notes, as the case may be, with such reduction and/or offset subject to a cap. The effect of the Capped Calls have not been reflected in dilutive share calculations set forth above as they are anti-dilutive.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
(b)WeFor the 2022 period, we have excluded (i) the aggregate number of shares issuable pursuant to outstanding options, SARs, and RSUs of 19.930.6 million, and (ii) the aggregate number of shares issuable pursuant to outstanding PSARs and PSUs of 8.2 million, and (iii) forbecause their inclusion would have been anti-dilutive to the nine-monthcomputation or, in the case of certain PSARs, because such awards had not yet met the applicable performance criteria.
(c)For the 2021 period, using the if-converted method,we have excluded (i) the aggregate number of shares potentially issuable under our Convertible Notespursuant to outstanding options, SARs and RSUs of 19.517.6 million, and (ii) the aggregate number of shares issuable pursuant to outstanding PSUsof 2.0 million because their inclusion would have been anti-dilutive to the computation or, in the case of certain PSUs, and PSARs, because such awards had not yet met the applicable performance criteria.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
(17)(16) Equity
Contribution from noncontrolling interest owners
During the third quarter of 2021, we received an equity contribution of $47 million from the noncontrolling interest owner of our Cabletica entity, the proceeds of which were used to partially fund the Telefónica-Costa Rica Acquisition. This contribution represented their pro-rata share of the equity portion of the purchase price for the Telefónica-Costa Rica Acquisition, and has been reflected as a contribution from noncontrolling interest owners in our condensed consolidated statements of equity and as a financing activity in our condensed consolidated statement of cash flows.
Share Repurchase ProgramPrograms
On March 16, 2020, our Directors approved the 2020 Share Repurchase Program, which authorizesauthorized us to repurchase from time to time up to $100 million of our Class A common shares and/or Class C common shares through March 2022, subject to certain limitations and conditions. On February 22, 2022, our Directors approved the 2022 Share Repurchase Program. This program authorizes us to repurchase from time to time up to an additional $200 million of our Class A common shares and/or Class C common shares through December 2024. The 2022 Share Repurchase Program does not obligate us to repurchase any of our Class A or C common shares. Under the 2022 Share Repurchase Program, we may repurchase our common shares from time to time in open market purchases at prevailing market prices, in privately negotiated transactions, in block trades, derivative transactions and/or through other legally permissible means.
During the ninethree months ended September 30, 2021,March 31, 2022, we repurchased 2,169,700 Class A common shares. During the nine months ended September 30, 2020, we repurchased293,8161,884,500 and 673,1583,524,000 Class A and Class C common shares, respectively.respectively,under the Share Repurchase Programs.We did not repurchase any shares during the three months ended March 31, 2021. At September 30, 2021,March 31, 2022, the remaining amount authorized for share repurchases under the 2022 Share Repurchase Program was $61$170 million.
Rights Offering
On August 5, 2020, our Directors authorized the Rights Distribution to holders of Class C Rights to acquire LILAK common shares in the Rights Offering. In the Rights Distribution, we distributed 0.269 of a Class C Right for each share of Class A, Class B or Class C common shares of Liberty Latin America held as of September 8, 2020, which was the record date for the Rights Distribution. Fractional Class C Rights were rounded up to the nearest whole right. Each whole Class C Right entitled the holder to purchase, pursuant to the basic subscription privilege, 1 share of LILAK at a subscription price of $7.14, which was equal to an approximate 25% discount to the volume weighted average trading price of LILAK for the 3-day trading period ending on and including September 2, 2020. Each Class C Right also entitled the holder to subscribe for additional shares of LILAK that were unsubscribed for in the Rights Offering pursuant to an over-subscription privilege. The Rights Offering commenced on September 11, 2020, which was also the ex-dividend date for the Rights Distribution. The Rights Offering expired in accordance with its terms on September 25, 2020 and was fully subscribed with 49,049,073 shares of LILAK issued to those rights holders exercising basic and, if applicable, over-subscription privileges.
(18)(17) Commitments and Contingencies
Guarantees and Other Credit Enhancements
In the ordinary course of business, we may provide (i) indemnifications to our lenders, our vendors and certain other parties and (ii) performance and/or financial guarantees to local municipalities, our customers and vendors. Historically, these arrangements have not resulted in our company making any material payments and we do not believe that they will result in material payments in the future.
Legal and Regulatory Proceedings and Other Contingencies
VTR Class Action. On August 25, 2020, VTR was notified that SERNAC had filed a class action complaint against VTR in the 14th Civil Court of Santiago. The complaint relates to consumer complaints regarding VTR’s broadband service and
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
capacity during the pandemic and raises claims regarding, among other things, VTR’s disclosure of its broadband speeds and aggregate capacity availability and VTR’s response to address the causes of service instability during the pandemic. VTR was also notified in August about 2 additional class action complaints filed by consumer associations (ODECU and AGRECU) making similar claims and allegations. The class action complaint of ODECU was filed in the 21st Civil Court of Santiago, and the class action complaint of AGRECU was filed in the 26th Civil Court of Santiago. The complaint of SERNAC and ODECU seeks (i) the Court declare that VTR has infringed the rules of the Consumer Protection Law; (ii) the responsibility of VTR for such infractions and, if so, establish the corresponding fines; and (iii) compensatory and punitive damages. In the case of AGRECU, the complaint only seeks compensatory damages. On October 22, 2020, VTR was notified of a fourth class action complaint filed by CONADECUS in the 16th Civil Court of Santiago alleging that VTR did not adhere to certain call center, technical visit and service level requirements under applicable law. On April 21, 2021, the Court of Appeals of Santiago issued a ruling joining the four4 class action complaints into one1 legal procedure. We believe that the allegations contained in the complaints are without merit, in particular as it relates to VTR’s service and response during the pandemic and intend to defend the complaints vigorously. We cannot predict at this point the length of time that these actions will be ongoing. Additionally, a liability, if any, or a reasonable range of loss is not currently determinable based upon the current facts and circumstances of these claims.
Regulatory Issues.Video distribution, broadband internet, fixed-line telephony and mobile businesses are regulated in each of the countries in which we operate. The scope of regulation varies from country to country. Adverse regulatory developments could subject our businesses to a number of risks. Regulation, including conditions imposed on us by competition or other authorities as a requirement to close acquisitions or dispositions, could limit growth, revenue and the number and types of services offered and could lead to increased operating costs and property and equipment additions. In addition, regulation may restrict our operations and subject them to further competitive pressure, including pricing restrictions, interconnect and other access obligations, and restrictions or controls on content, including content provided by third parties. Failure to comply with current or future regulation could expose our businesses to various penalties.
In addition to the foregoing items, we We have contingent liabilities related to matters arising in the ordinary course of business, including (i) legal proceedings, (ii) issues involving wage, property, withholding and other tax issues and (iii) disputes over interconnection, programming and copyright fees. While we generally expect that the amounts required to satisfy these contingencies will not materially differ from any estimated amounts we have accrued, no assurance can be given that the resolution of one or more of these contingencies will not result in a material impact on our results of operations, cash flows or financial position in any given period. Due, in general, to the complexity of the issues involved and, in certain cases, the lack of a clear basis for predicting outcomes, we cannot provide a meaningful range of potential losses or cash outflows that might result from any unfavorable outcomes.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
(19)(18) Segment Reporting
Our reportable segments derive their revenue primarily from residential and B2B services, including video, broadband internet and fixed-line telephony services and mobile services. Our corporate category includes our corporate operations.operations, which derive revenue from mobile handset insurance services. We generally identify our reportable segments as those operating segments that represent 10% or more of our revenue, Adjusted OIBDA or total assets.
As a result of organizational changes during the first quarter of 2021, VTR and Costa Rica are now each an operating and reportable segment rather than one segment. Accordingly, as of September 30, 2021,March 31, 2022, our reportable segments are as follows:
•C&W Caribbean and Networks;
•C&W Panama;
•Liberty Puerto Rico;
•VTR; and
•Costa Rica.
Prior to the first quarter of 2021, VTR and Cabletica were collectively 1 operating segment. As a result of organizational changes during the first quarter of 2021, these operations became separate operating segments. Following the Telefónica-Costa Rica Acquisition on August 9, 2021 (as further described in note 4), Cabletica and Telefónica-Costa Rica now comprise our operating and reportable segment referred to herein as “Costa Rica.”
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
Performance Measures of our Reportable Segments
We evaluate performance and make decisions about allocating resources to our reportable segments based on financial measures such as revenue and Adjusted OIBDA. In addition, we review non-financial measures such as subscriber growth.
Adjusted OIBDA is the primary measure used by our chief operating decision maker to evaluate segment operating performance. Adjusted OIBDA is also a key factor that is used by our internal decision makers to (i) determine how to allocate resources to segments and (ii) evaluate the effectiveness of our management for purposes of incentive compensation plans. Our internal decision makers believe Adjusted OIBDA is a meaningful measure because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure and allows management to (i) readily view operating trends, (ii) perform analytical comparisons and benchmarking between segments and (iii) identify strategies to improve operating performance in the different countries in which we operate. A reconciliation of total Adjusted OIBDA to operating income (loss) and to earnings (loss) before income taxes is presented below.
The amounts presented below represent 100% of the revenue and Adjusted OIBDA of each of our reportable segments and our corporate operations. As we have the ability to control certain subsidiaries that are not wholly-owned, we include 100% of the revenue and expenses of these entities in our condensed consolidated statements of operations despite the fact that third parties own significant interests in these entities. The noncontrolling owners’ interests in the operating results of Costa Rica and(i) certain subsidiaries of (a) C&W and (b) Liberty Puerto Rico, and (ii) Costa Rica are reflected in net earnings or loss attributable to noncontrolling interests in our condensed consolidated statements of operations.
| | | | | | | | | | | | | | | | | | | | | | | |
| Revenue |
| | Three months ended September 30, | | Nine months ended September 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
| | in millions |
| | | | | | | |
| C&W Caribbean and Networks | $ | 434.5 | | | $ | 421.7 | | | $ | 1,298.5 | | | $ | 1,278.6 | |
| C&W Panama | 128.9 | | | 118.9 | | | 379.0 | | | 369.4 | |
| Liberty Puerto Rico | 359.0 | | | 114.4 | | | 1,080.7 | | | 328.1 | |
| VTR | 193.1 | | | 201.8 | | | 612.7 | | | 601.3 | |
| Costa Rica | 76.9 | | | 35.1 | | | 149.4 | | | 103.4 | |
| Corporate | 5.4 | | | — | | | 16.2 | | | — | |
| Intersegment eliminations | (5.8) | | | (4.4) | | | (16.6) | | | (13.4) | |
| Total | $ | 1,192.0 | | | $ | 887.5 | | | $ | 3,519.9 | | | $ | 2,667.4 | |
| | | Adjusted OIBDA | | | Revenue |
| | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions | | | in millions |
| | C&W Caribbean and Networks | C&W Caribbean and Networks | $ | 181.6 | | | $ | 177.3 | | | $ | 551.0 | | | $ | 531.0 | | C&W Caribbean and Networks | | $ | 444.9 | | | $ | 429.8 | |
| C&W Panama | C&W Panama | 47.9 | | | 43.1 | | | 137.5 | | | 125.8 | | C&W Panama | | 127.2 | | | 127.3 | |
| Liberty Puerto Rico | Liberty Puerto Rico | 142.2 | | | 58.1 | | | 453.5 | | | 161.0 | | Liberty Puerto Rico | | 369.3 | | | 361.3 | |
| VTR | VTR | 65.1 | | | 79.1 | | | 204.3 | | | 232.3 | | VTR | | 170.8 | | | 210.3 | |
| Costa Rica | Costa Rica | 24.0 | | | 13.8 | | | 50.8 | | | 40.3 | | Costa Rica | | 107.4 | | | 36.2 | |
| Corporate | Corporate | (14.7) | | | (11.2) | | | (37.7) | | | (33.7) | | Corporate | | 5.6 | | | 5.4 | |
| | Intersegment eliminations | | Intersegment eliminations | | (6.5) | | | (5.1) | |
| Total | Total | $ | 446.1 | | | $ | 360.2 | | | $ | 1,359.4 | | | $ | 1,056.7 | | Total | | $ | 1,218.7 | | | $ | 1,165.2 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
| | | | | | | | | | | | | | | |
| | | | | Adjusted OIBDA |
| | | | Three months ended March 31, |
| | | | | 2022 | | 2021 |
| | | | | | in millions |
| | | | | | | |
| C&W Caribbean and Networks | | | | | $ | 192.5 | | | $ | 181.3 | |
| C&W Panama | | | | | 40.5 | | | 44.0 | |
| Liberty Puerto Rico | | | | | 144.3 | | | 149.9 | |
| VTR | | | | | 46.5 | | | 70.5 | |
| Costa Rica | | | | | 30.2 | | | 14.1 | |
| Corporate | | | | | (13.8) | | | (10.5) | |
| | | | | | | |
| Total | | | | | $ | 440.2 | | | $ | 449.3 | |
The following table provides a reconciliation of total Adjusted OIBDA to operating income (loss) and to earnings (loss) before income taxes:
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions | | | in millions |
| | Total Adjusted OIBDA | Total Adjusted OIBDA | $ | 446.1 | | | $ | 360.2 | | | $ | 1,359.4 | | | $ | 1,056.7 | | Total Adjusted OIBDA | | $ | 440.2 | | | $ | 449.3 | |
| Share-based compensation expense | Share-based compensation expense | (33.1) | | | (28.0) | | | (88.9) | | | (75.3) | | Share-based compensation expense | | (30.0) | | | (23.0) | |
| Depreciation and amortization | Depreciation and amortization | (253.5) | | | (231.6) | | | (753.4) | | | (661.5) | | Depreciation and amortization | | (214.1) | | | (243.1) | |
| Impairment, restructuring and other operating items, net | Impairment, restructuring and other operating items, net | (22.1) | | | (14.0) | | | (41.3) | | | (331.5) | | Impairment, restructuring and other operating items, net | | (7.8) | | | (2.2) | |
| Operating income (loss) | 137.4 | | | 86.6 | | | 475.8 | | | (11.6) | | |
| Operating income | | Operating income | | 188.3 | | | 181.0 | |
| Interest expense | Interest expense | (137.1) | | | (129.9) | | | (397.2) | | | (408.5) | | Interest expense | | (129.7) | | | (126.4) | |
| Realized and unrealized gains (losses) on derivative instruments, net | Realized and unrealized gains (losses) on derivative instruments, net | 292.0 | | | (78.1) | | | 464.2 | | | (239.7) | | Realized and unrealized gains (losses) on derivative instruments, net | | (33.7) | | | 114.9 | |
| Foreign currency transaction gains (losses), net | Foreign currency transaction gains (losses), net | (136.2) | | | 30.1 | | | (206.0) | | | (115.1) | | Foreign currency transaction gains (losses), net | | 96.6 | | | (25.4) | |
| Losses on debt extinguishment | Losses on debt extinguishment | (1.9) | | | (41.7) | | | (25.2) | | | (45.1) | | Losses on debt extinguishment | | — | | | (23.3) | |
| Other income (expense), net | (41.1) | | | 0.2 | | | (42.1) | | | 11.8 | | |
| Earnings (loss) before income taxes | $ | 113.1 | | | $ | (132.8) | | | $ | 269.5 | | | $ | (808.2) | | |
| Other expense, net | | Other expense, net | | (4.8) | | | (0.6) | |
| Earnings before income taxes | | Earnings before income taxes | | $ | 116.7 | | | $ | 120.2 | |
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
March 31, 2022
(unaudited)
Property and Equipment Additions of our Reportable Segments
The property and equipment additions of our reportable segments and corporate operations (including capital additions financed under vendor financing or finance lease arrangements) are presented below and reconciled to the capital expenditure amounts included in our condensed consolidated statements of cash flows. For additional information concerning capital additions financed under vendor financing, see note 7.
| | | | Nine months ended September 30, | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2022 | | 2021 |
| | | in millions | | in millions |
| | C&W Caribbean and Networks | C&W Caribbean and Networks | $ | 190.9 | | | $ | 181.8 | | C&W Caribbean and Networks | $ | 51.6 | | | $ | 49.6 | |
| C&W Panama | C&W Panama | 64.5 | | | 52.3 | | C&W Panama | 15.0 | | | 10.7 | |
| Liberty Puerto Rico | Liberty Puerto Rico | 139.1 | | | 52.3 | | Liberty Puerto Rico | 44.5 | | | 33.7 | |
| VTR | VTR | 158.0 | | | 126.7 | | VTR | 44.7 | | | 46.7 | |
| Costa Rica | Costa Rica | 25.6 | | | 17.7 | | Costa Rica | 9.9 | | | 7.3 | |
| Corporate | Corporate | 20.9 | | | 12.3 | | Corporate | 9.7 | | | 4.4 | |
| Total property and equipment additions | Total property and equipment additions | 599.0 | | | 443.1 | | Total property and equipment additions | 175.4 | | | 152.4 | |
| Assets acquired under capital-related vendor financing arrangements | Assets acquired under capital-related vendor financing arrangements | (65.0) | | | (80.5) | | Assets acquired under capital-related vendor financing arrangements | (31.9) | | | (18.8) | |
| | Changes in current liabilities related to capital expenditures | Changes in current liabilities related to capital expenditures | 10.7 | | | 55.7 | | Changes in current liabilities related to capital expenditures | 21.2 | | | 2.0 | |
| Total capital expenditures | Total capital expenditures | $ | 544.7 | | | $ | 418.3 | | Total capital expenditures | $ | 164.7 | | | $ | 135.6 | |
Revenue by Major Category
Our revenue by major category for our reportable segments is set forth in the tables below and includes the following categories:
•residential fixed subscription and residential mobile services revenue, which includes amounts received from subscribers for ongoing fixed and airtime services, respectively;
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
•residential fixed non-subscription revenue, which primarily includes interconnect and advertising revenue;
•B2B service revenue, which primarily includes broadband internet, video, fixed-line telephony, mobile and managed services (including equipment installation contracts) offered to small (including small or home office), medium and large enterprises and, on a wholesale basis, other telecommunication operators; and
•B2B subsea network revenue, which includes long-term capacity contracts with customers where the customer either pays a fee over time or prepays for the capacity upfront and pays a portion related to operating and maintenance of the network over time.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, 2021 |
| | C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico | | VTR | | Costa Rica | | Corporate (a) | | Intersegment Eliminations | | Total |
| | in millions |
| Residential revenue: | | | | | | | | | | | | | | | |
| Residential fixed revenue: | | | | | | | | | | | | | | | |
| Subscription revenue: | | | | | | | | | | | | | | | |
| Video | $ | 32.6 | | | $ | 6.5 | | | $ | 39.4 | | | $ | 72.6 | | | $ | 18.4 | | | $ | — | | | $ | — | | | $ | 169.5 | |
| Broadband internet | 68.9 | | | 11.5 | | | 64.1 | | | 75.8 | | | 15.4 | | | — | | | — | | | 235.7 | |
| Fixed-line telephony | 16.6 | | | 4.3 | | | 7.1 | | | 19.4 | | | 1.1 | | | — | | | — | | | 48.5 | |
| Total subscription revenue | 118.1 | | | 22.3 | | | 110.6 | | | 167.8 | | | 34.9 | | | — | | | — | | | 453.7 | |
| Non-subscription revenue | 10.6 | | | 2.3 | | | 5.0 | | | 3.8 | | | 1.5 | | | — | | | (0.1) | | | 23.1 | |
| Total residential fixed revenue | 128.7 | | | 24.6 | | | 115.6 | | | 171.6 | | | 36.4 | | | — | | | (0.1) | | | 476.8 | |
| Residential mobile revenue: | | | | | | | | | | | | | | | |
| Service revenue | 76.1 | | | 38.6 | | | 114.2 | | | 11.5 | | | 27.6 | | | — | | | 0.1 | | | 268.1 | |
| Interconnect, inbound roaming, equipment sales and other (b) | 12.8 | | | 11.6 | | | 70.8 | | | 1.7 | | | 7.0 | | | 5.4 | | | — | | | 109.3 | |
| Total residential mobile revenue | 88.9 | | | 50.2 | | | 185.0 | | | 13.2 | | | 34.6 | | | 5.4 | | | 0.1 | | | 377.4 | |
| Total residential revenue | 217.6 | | | 74.8 | | | 300.6 | | | 184.8 | | | 71.0 | | | 5.4 | | | — | | | 854.2 | |
| B2B revenue: | | | | | | | | | | | | | | | |
| Service revenue (c) | 153.8 | | | 54.1 | | | 51.0 | | | 8.3 | | | 5.9 | | | — | | | (1.4) | | | 271.7 | |
| Subsea network revenue | 63.1 | | | — | | | — | | | — | | | — | | | — | | | (4.4) | | | 58.7 | |
| Total B2B revenue | 216.9 | | | 54.1 | | | 51.0 | | | 8.3 | | | 5.9 | | | — | | | (5.8) | | | 330.4 | |
| Other revenue (d) | — | | | — | | | 7.4 | | | — | | | — | | | — | | | — | | | 7.4 | |
| Total | $ | 434.5 | | | $ | 128.9 | | | $ | 359.0 | | | $ | 193.1 | | | $ | 76.9 | | | $ | 5.4 | | | $ | (5.8) | | | $ | 1,192.0 | |
(a)Amount relates to services we provide for mobile handset insurance following the closing of the AT&T Acquisition.
(b)The total amount includes $24 million of inbound roaming revenue and $60 million of revenue from sales of mobile handsets and other devices.
(c)The total amount includes$5 millionof revenue from sales of mobile handsets and other devices to B2B mobile customers.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
(d)Amount relates to revenue received from the FCC primarily related to Liberty Mobile following the closing of the AT&T Acquisition.
| | | Three months ended September 30, 2020 | | Three months ended March 31, 2022 |
| | | C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico | | VTR | | Costa Rica | | Intersegment Eliminations | | Total | | C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico | | VTR | | Costa Rica | | Corporate | | Intersegment Eliminations | | Total |
| | | in millions | | in millions |
| Residential revenue: | Residential revenue: | | Residential revenue: | |
| Residential fixed revenue: | Residential fixed revenue: | | Residential fixed revenue: | |
| Subscription revenue: | Subscription revenue: | | Subscription revenue: | |
| Video | Video | $ | 34.7 | | | $ | 6.1 | | | $ | 37.1 | | | $ | 72.2 | | | $ | 19.7 | | | $ | — | | | $ | 169.8 | | Video | $ | 32.6 | | | $ | 7.1 | | | $ | 39.7 | | | $ | 65.9 | | | $ | 17.3 | | | $ | — | | | $ | — | | | $ | 162.6 | |
| Broadband internet | Broadband internet | 62.7 | | | 9.5 | | | 52.5 | | | 84.5 | | | 13.0 | | | — | | | 222.2 | | Broadband internet | 70.6 | | | 12.4 | | | 68.9 | | | 65.8 | | | 16.3 | | | — | | | — | | | 234.0 | |
| Fixed-line telephony | Fixed-line telephony | 18.3 | | | 4.3 | | | 6.5 | | | 18.0 | | | 1.0 | | | — | | | 48.1 | | Fixed-line telephony | 18.5 | | | 4.2 | | | 7.2 | | | 17.9 | | | 1.1 | | | — | | | — | | | 48.9 | |
| Total subscription revenue | Total subscription revenue | 115.7 | | | 19.9 | | | 96.1 | | | 174.7 | | | 33.7 | | | — | | | 440.1 | | Total subscription revenue | 121.7 | | | 23.7 | | | 115.8 | | | 149.6 | | | 34.7 | | | — | | | — | | | 445.5 | |
| Non-subscription revenue | Non-subscription revenue | 10.5 | | | 2.6 | | | 4.2 | | | 4.0 | | | 1.4 | | | — | | | 22.7 | | Non-subscription revenue | 9.1 | | | 2.2 | | | 5.4 | | | 3.1 | | | 0.8 | | | — | | | — | | | 20.6 | |
| Total residential fixed revenue | Total residential fixed revenue | 126.2 | | | 22.5 | | | 100.3 | | | 178.7 | | | 35.1 | | | — | | | 462.8 | | Total residential fixed revenue | 130.8 | | | 25.9 | | | 121.2 | | | 152.7 | | | 35.5 | | | — | | | — | | | 466.1 | |
| Residential mobile revenue: | Residential mobile revenue: | | | | | | | | | | | | | | Residential mobile revenue: | | | | | | | | | | | | | | | |
| Service revenue | Service revenue | 71.6 | | | 39.1 | | | — | | | 13.8 | | | — | | | — | | | 124.5 | | Service revenue | 76.5 | | | 43.0 | | | 116.8 | | | 9.3 | | | 46.2 | | | — | | | — | | | 291.8 | |
| Interconnect, inbound roaming, equipment sales and other (a) | Interconnect, inbound roaming, equipment sales and other (a) | 10.7 | | | 10.1 | | | — | | | 2.0 | | | — | | | — | | | 22.8 | | Interconnect, inbound roaming, equipment sales and other (a) | 14.5 | | | 10.4 | | | 63.2 | | | 1.1 | | | 16.5 | | | 5.6 | | | — | | | 111.3 | |
| Total residential mobile revenue | Total residential mobile revenue | 82.3 | | | 49.2 | | | — | | | 15.8 | | | — | | | — | | | 147.3 | | Total residential mobile revenue | 91.0 | | | 53.4 | | | 180.0 | | | 10.4 | | | 62.7 | | | 5.6 | | | — | | | 403.1 | |
| Total residential revenue | Total residential revenue | 208.5 | | | 71.7 | | | 100.3 | | | 194.5 | | | 35.1 | | | — | | | 610.1 | | Total residential revenue | 221.8 | | | 79.3 | | | 301.2 | | | 163.1 | | | 98.2 | | | 5.6 | | | — | | | 869.2 | |
| B2B revenue: | B2B revenue: | | | | | | | | | | | | | | B2B revenue: | | | | | | | | | | | | | | | |
| Service revenue (b) | Service revenue (b) | 151.2 | | | 47.2 | | | 14.1 | | | 7.3 | | | — | | | (0.7) | | | 219.1 | | Service revenue (b) | 158.2 | | | 47.9 | | | 57.8 | | | 7.7 | | | 9.2 | | | — | | | (1.7) | | | 279.1 | |
| Subsea network revenue | Subsea network revenue | 62.0 | | | — | | | — | | | — | | | — | | | (3.7) | | | 58.3 | | Subsea network revenue | 64.9 | | | — | | | — | | | — | | | — | | | — | | | (4.8) | | | 60.1 | |
| Total B2B revenue | Total B2B revenue | 213.2 | | | 47.2 | | | 14.1 | | | 7.3 | | | — | | | (4.4) | | | 277.4 | | Total B2B revenue | 223.1 | | | 47.9 | | | 57.8 | | | 7.7 | | | 9.2 | | | — | | | (6.5) | | | 339.2 | |
| | Other revenue | | Other revenue | — | | | — | | | 10.3 | | | — | | | — | | | — | | | — | | | 10.3 | |
| Total | Total | $ | 421.7 | | | $ | 118.9 | | | $ | 114.4 | | | $ | 201.8 | | | $ | 35.1 | | | $ | (4.4) | | | $ | 887.5 | | Total | $ | 444.9 | | | $ | 127.2 | | | $ | 369.3 | | | $ | 170.8 | | | $ | 107.4 | | | $ | 5.6 | | | $ | (6.5) | | | $ | 1,218.7 | |
(a)The total amount includes$3 $26 million of inbound roaming revenue and $7$59 million of revenue from sales of mobile handsets and other devices.
(b)The total amount includes $2$5 million of revenue from sales of mobile handsets and other devices to B2B mobile customers.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine months ended September 30, 2021 |
| | C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico | | VTR | | Costa Rica | | Corporate (a) | | Intersegment Eliminations | | Total |
| | in millions |
| Residential revenue: | | | | | | | | | | | | | | | |
| Residential fixed revenue: | | | | | | | | | | | | | | | |
| Subscription revenue: | | | | | | | | | | | | | | | |
| Video | $ | 100.3 | | | $ | 18.9 | | | $ | 117.2 | | | $ | 228.3 | | | $ | 56.9 | | | $ | — | | | $ | — | | | $ | 521.6 | |
| Broadband internet | 203.2 | | | 33.0 | | | 188.7 | | | 245.3 | | | 43.9 | | | — | | | — | | | 714.1 | |
| Fixed-line telephony | 50.2 | | | 12.8 | | | 21.2 | | | 59.3 | | | 3.3 | | | — | | | — | | | 146.8 | |
| Total subscription revenue | 353.7 | | | 64.7 | | | 327.1 | | | 532.9 | | | 104.1 | | | — | | | — | | | 1,382.5 | |
| Non-subscription revenue | 32.7 | | | 7.2 | | | 14.1 | | | 11.2 | | | 4.8 | | | — | | | (0.1) | | | 69.9 | |
| Total residential fixed revenue | 386.4 | | | 71.9 | | | 341.2 | | | 544.1 | | | 108.9 | | | — | | | (0.1) | | | 1,452.4 | |
| Residential mobile revenue: | | | | | | | | | | | | | | | |
| Service revenue | 222.9 | | | 117.3 | | | 346.3 | | | 37.7 | | | 27.6 | | | — | | | 0.1 | | | 751.9 | |
| Interconnect, inbound roaming, equipment sales and other (b) | 38.2 | | | 33.2 | | | 213.8 | | | 5.8 | | | 7.0 | | | 16.2 | | | — | | | 314.2 | |
| Total residential mobile revenue | 261.1 | | | 150.5 | | | 560.1 | | | 43.5 | | | 34.6 | | | 16.2 | | | 0.1 | | | 1,066.1 | |
| Total residential revenue | 647.5 | | | 222.4 | | | 901.3 | | | 587.6 | | | 143.5 | | | 16.2 | | | — | | | 2,518.5 | |
| B2B revenue: | | | | | | | | | | | | | | | |
| Service revenue (c) | 457.4 | | | 156.6 | | | 155.0 | | | 25.1 | | | 5.9 | | | — | | | (3.4) | | | 796.6 | |
| Subsea network revenue | 193.6 | | | — | | | — | | | — | | | — | | | — | | | (13.2) | | | 180.4 | |
| Total B2B revenue | 651.0 | | | 156.6 | | | 155.0 | | | 25.1 | | | 5.9 | | | — | | | (16.6) | | | 977.0 | |
| Other revenue (d) | — | | | — | | | 24.4 | | | — | | | — | | | — | | | — | | | 24.4 | |
| Total | $ | 1,298.5 | | | $ | 379.0 | | | $ | 1,080.7 | | | $ | 612.7 | | | $ | 149.4 | | | $ | 16.2 | | | $ | (16.6) | | | $ | 3,519.9 | |
(a)Amount relates to services we provide for mobile handset insurance following the closing of the AT&T Acquisition.
(b)The total amount includes $74 million of inbound roaming revenue and $173 million of revenue from sales of mobile handsets and other devices.
(c)The total amount includes $12 million of revenue from sales of mobile handsets and other devices to B2B mobile customers.
(d)Amount relates to revenue received from the FCC primarily related to Liberty Mobile following the closing of the AT&T Acquisition.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021
(unaudited)
| | | Nine months ended September 30, 2020 | | Three months ended March 31, 2021 |
| | | C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico | | VTR | | Costa Rica | | Intersegment Eliminations | | Total | | C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico | | VTR | | Costa Rica | | Corporate | | Intersegment Eliminations | | Total |
| | | in millions | | in millions |
| Residential revenue: | Residential revenue: | | Residential revenue: | |
| Residential fixed revenue: | Residential fixed revenue: | | Residential fixed revenue: | |
| Subscription revenue: | Subscription revenue: | | Subscription revenue: | |
| Video | Video | $ | 107.5 | | | $ | 20.9 | | | $ | 109.1 | | | $ | 214.8 | | | $ | 59.6 | | | $ | — | | | $ | 511.9 | | Video | $ | 34.3 | | | $ | 6.2 | | | $ | 38.6 | | | $ | 78.3 | | | $ | 19.5 | | | $ | — | | | $ | — | | | $ | 176.9 | |
| Broadband internet | Broadband internet | 185.1 | | | 28.6 | | | 147.2 | | | 247.2 | | | 38.0 | | | — | | | 646.1 | | Broadband internet | 66.6 | | | 10.7 | | | 61.4 | | | 84.8 | | | 14.0 | | | — | | | — | | | 237.5 | |
| Fixed-line telephony | Fixed-line telephony | 56.9 | | | 14.2 | | | 18.6 | | | 55.2 | | | 2.6 | | | — | | | 147.5 | | Fixed-line telephony | 16.5 | | | 4.3 | | | 7.0 | | | 20.0 | | | 1.1 | | | — | | | — | | | 48.9 | |
| Total subscription revenue | Total subscription revenue | 349.5 | | | 63.7 | | | 274.9 | | | 517.2 | | | 100.2 | | | — | | | 1,305.5 | | Total subscription revenue | 117.4 | | | 21.2 | | | 107.0 | | | 183.1 | | | 34.6 | | | — | | | — | | | 463.3 | |
| Non-subscription revenue | Non-subscription revenue | 32.3 | | | 9.0 | | | 12.6 | | | 13.6 | | | 3.2 | | | — | | | 70.7 | | Non-subscription revenue | 8.5 | | | 2.5 | | | 4.2 | | | 3.4 | | | 1.6 | | | — | | | — | | | 20.2 | |
| Total residential fixed revenue | Total residential fixed revenue | 381.8 | | | 72.7 | | | 287.5 | | | 530.8 | | | 103.4 | | | — | | | 1,376.2 | | Total residential fixed revenue | 125.9 | | | 23.7 | | | 111.2 | | | 186.5 | | | 36.2 | | | — | | | — | | | 483.5 | |
| Residential mobile revenue: | Residential mobile revenue: | | | | | | | | | | | | | | Residential mobile revenue: | | | | | | | | | | | | | | | |
| Service revenue | Service revenue | 218.0 | | | 120.1 | | | — | | | 42.2 | | | — | | | — | | | 380.3 | | Service revenue | 71.8 | | | 44.6 | | | 116.5 | | | 13.2 | | | — | | | — | | | — | | | 246.1 | |
| Interconnect, inbound roaming, equipment sales and other (a) | Interconnect, inbound roaming, equipment sales and other (a) | 33.3 | | | 31.3 | | | — | | | 5.6 | | | — | | | — | | | 70.2 | | Interconnect, inbound roaming, equipment sales and other (a) | 13.6 | | | 10.3 | | | 73.0 | | | 2.3 | | | — | | | 5.4 | | | — | | | 104.6 | |
| Total residential mobile revenue | Total residential mobile revenue | 251.3 | | | 151.4 | | | — | | | 47.8 | | | — | | | — | | | 450.5 | | Total residential mobile revenue | 85.4 | | | 54.9 | | | 189.5 | | | 15.5 | | | — | | | 5.4 | | | — | | | 350.7 | |
| Total residential revenue | Total residential revenue | 633.1 | | | 224.1 | | | 287.5 | | | 578.6 | | | 103.4 | | | — | | | 1,826.7 | | Total residential revenue | 211.3 | | | 78.6 | | | 300.7 | | | 202.0 | | | 36.2 | | | 5.4 | | | — | | | 834.2 | |
| B2B revenue: | B2B revenue: | | | | | | | | | | | | | | B2B revenue: | | | | | | | | | | | | | | | |
| Service revenue (b) | Service revenue (b) | 451.4 | | | 145.3 | | | 40.6 | | | 22.7 | | | — | | | (2.9) | | | 657.1 | | Service revenue (b) | 150.8 | | | 48.7 | | | 52.1 | | | 8.3 | | | — | | | — | | | (1.1) | | | 258.8 | |
| Subsea network revenue | Subsea network revenue | 194.1 | | | — | | | — | | | — | | | — | | | (10.5) | | | 183.6 | | Subsea network revenue | 67.7 | | | — | | | — | | | — | | | — | | | — | | | (4.0) | | | 63.7 | |
| Total B2B revenue | Total B2B revenue | 645.5 | | | 145.3 | | | 40.6 | | | 22.7 | | | — | | | (13.4) | | | 840.7 | | Total B2B revenue | 218.5 | | | 48.7 | | | 52.1 | | | 8.3 | | | — | | | — | | | (5.1) | | | 322.5 | |
| | Other revenue | | Other revenue | — | | | — | | | 8.5 | | | — | | | — | | | — | | | — | | | 8.5 | |
| Total | Total | $ | 1,278.6 | | | $ | 369.4 | | | $ | 328.1 | | | $ | 601.3 | | | $ | 103.4 | | | $ | (13.4) | | | $ | 2,667.4 | | Total | $ | 429.8 | | | $ | 127.3 | | | $ | 361.3 | | | $ | 210.3 | | | $ | 36.2 | | | $ | 5.4 | | | $ | (5.1) | | | $ | 1,165.2 | |
(a)The total amount includes $1225 million of inbound roaming revenue and $2357 million of revenue from sales of mobile handsets and other devices.
(b)The total amount includes $8$3 million of revenue from sales of mobile handsets and other devices to B2B mobile customers.
Liberty Latin America Ltd.
Notes to Condensed Consolidated Financial Statements – (Continued)
September 30, 2021March 31, 2022
(unaudited)
Revenue by Geographic MarketsMarket
The revenue from third-party customers for each of our geographic markets is set forth in the table below.
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions | | | in millions |
| | Puerto Rico | Puerto Rico | $ | 345.6 | | | $ | 114.0 | | | $ | 1,039.5 | | | $ | 327.0 | | Puerto Rico | | $ | 356.6 | | | $ | 347.3 | |
| Chile | Chile | 193.1 | | | 201.8 | | | 612.7 | | | 601.3 | | Chile | | 170.8 | | | 210.3 | |
| Panama | Panama | 128.2 | | | 118.3 | | | 377.2 | | | 367.6 | | Panama | | 126.4 | | | 126.7 | |
| Jamaica | Jamaica | 100.6 | | | 93.8 | | | 297.3 | | | 277.5 | | Jamaica | | 104.8 | | | 97.3 | |
| Networks & LatAm (a) | Networks & LatAm (a) | 85.6 | | | 83.8 | | | 260.8 | | | 262.3 | | Networks & LatAm (a) | | 88.5 | | | 90.4 | |
| Costa Rica | Costa Rica | 76.8 | | | 35.1 | | | 149.3 | | | 103.4 | | Costa Rica | | 107.2 | | | 36.2 | |
| The Bahamas | The Bahamas | 47.8 | | | 44.6 | | | 140.5 | | | 134.9 | | The Bahamas | | 47.7 | | | 45.0 | |
| Trinidad and Tobago | | Trinidad and Tobago | | 40.6 | | | 39.7 | |
| Barbados | Barbados | 35.6 | | | 34.9 | | | 104.5 | | | 105.2 | | Barbados | | 36.5 | | | 33.9 | |
| Trinidad and Tobago | 38.7 | | | 40.1 | | | 118.3 | | | 120.8 | | |
| Curacao | Curacao | 34.6 | | | 35.9 | | | 104.2 | | | 110.0 | | Curacao | | 33.1 | | | 34.3 | |
| Other (b) | Other (b) | 105.4 | | | 85.2 | | | 315.6 | | | 257.4 | | Other (b) | | 106.5 | | | 104.1 | |
| Total | Total | $ | 1,192.0 | | | $ | 887.5 | | | $ | 3,519.9 | | | $ | 2,667.4 | | Total | | $ | 1,218.7 | | | $ | 1,165.2 | |
(a)The amounts represent managed services and wholesale revenue from various jurisdictions across Latin America and the Caribbean, primarily related to the sale and lease of telecommunications capacity on C&W’s subsea and terrestrial fiber optic cable networks.
(b)The amounts primarily relate to a number of countries in which we have less significant operations, mostall of which are located in the Caribbean, and to a lesser extent, in Latin America.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
See the Glossary of defined terms at the beginning of this Quarterly Report on Form 10-Q.
The following discussion and analysis, which should be read in conjunction with our 20202021 Form 10-K and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, is intended to assist in providing an understanding of our financial condition, changes in financial condition and results of operations and is organized as follows:
•Forward-looking Statements. This section provides a description of certain factors that could cause actual results or events to differ materially from anticipated results or events.
•Overview. This section provides a general description of our business and recent events.
•Material Changes in Results of Operations. This section provides an analysis of our results of operations for the three and nine months ended September 30, 2021March 31, 2022 and 2020.2021.
•Material Changes in Financial Condition. This section provides an analysis of our corporate and subsidiary liquidity, condensed consolidated statements of cash flows and contractual commitments.
Unless otherwise indicated, convenience translations into U.S. dollars are calculated, and operational data (including subscriber statistics) areis presented as of September 30, 2021.March 31, 2022.
Forward-looking Statements
Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent that statements in this Quarterly Report on Form 10-Q are not recitations of historical fact, such statements constitute forward-looking statements, which, by definition, involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. In particular, statements under Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 3. Quantitative and Qualitative Disclosures About Market Risk, and Item 4. Controls and Procedures may contain forward-looking statements, including statements regarding: our business, products, foreign currency and finance strategies; subscriber growth and retention rates; changes in competitive, regulatory and economic factors; anticipated changes in our revenue, expenses, or growth rates; debt levels; our liquidity and our ability to access the liquidity of our subsidiaries; credit risks; internal control over financial reporting;reporting and the remediation of material weaknesses; foreign currency risks; interest rate risks; compliance with debt, financial and other covenants; our projected sources and uses of cash; the Telefónica-Costanica Costa Rica Acquisition; the timing and impacts of proposed transactions, including the pending Claro Panama Acquisition; the pending formation of the Chile JV; the effects and potential impacts of COVID-19 on our business and results of operations; reductions in operating and capital costs; the remediation of material weaknesses; our 2022 Share Repurchase Program; the outcome and impact of pending litigation; and other information and statements that are not historical fact. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. In addition to the risk factors described in Part I, Item 1A in our 20202021 Form 10-K, the following are some but not all of the factors that could cause actual results or events to differ materially from anticipated results or events:
•economic and business conditions and industry trends in the countries in which we operate;
•the competitive environment in the industries in the countries in which we operate, including competitor responses to our products and services;
•fluctuations in currency exchange rates, inflation rates and interest rates;
•our relationships with third-party programming providers and broadcasters, some of which are also offering content directly to consumers, and theour ability to acquire programming;maintain access to desirable programming on acceptable economic terms;
•our relationships with suppliers and licensors and the ability to maintain equipment, software and certain services;
•instability in global financial markets, including sovereign debt issues and related fiscal reforms;
•our ability to obtain additional financing and generate sufficient cash to meet our debt obligations;
•the impact of restrictions contained in certain of our subsidiaries’ debt instruments;
•consumer disposable income and spending levels, including the availability and amount of individual consumer debt;
•changes in consumer viewing preferences and habits, including on mobile devices that function on various operating systems and specifications, limited bandwidth, and different processing power and screen sizes;
•customer acceptance of our existing service offerings, including our video, broadband internet, fixed-line telephony, mobile and business service offerings, and of new technology, programming alternatives and other products and services that we may offer in the future;
•our ability to manage rapid technological changes;
•the impact of 5G and wireless technologies on broadband internet;
•our ability to maintain or increase the number of subscriptions to our video, broadband internet, fixed-line telephony and mobile service offerings and our average revenue per household and mobile subscriber;
•our ability to provide satisfactory customer service, including support for new and evolving products and services;
•our ability to maintain or increase rates to our subscribers or to pass through increased costs to our subscribers;
•the impact of our future financial performance, or market conditions generally, on the availability, terms and deployment of capital;
•changes in, or failure or inability to comply with, government regulations in the countries in which we operate and adverse outcomes from regulatory proceedings;
•government intervention that requires opening our broadband distribution networks to competitors;
•our ability to renew necessary regulatory licenses, concessions or other operating agreements and to otherwise acquire future spectrum or other licenses that we need to offer new mobile data or other technologies or services;
•our ability to obtain regulatory approval and satisfy other conditions necessary to close acquisitions and dispositions, and the impact of conditions imposed by competition and other regulatory authorities in connection with acquisitions, such as with respect to the pending formation of the Chile JV and the pending Claro Panama Acquisition;
•our ability to successfully acquire new businesses and, if acquired, to integrate, realize anticipated efficiencies from and implement our business plan with respect to the businesses we have acquired or that we expect to acquire, such as with respect to the Chile JV, the pending Claro Panama Acquisition; the Telefónica-Costa Rica Acquisition and the AT&TTelefónica Costa Rica Acquisition;
•changes in laws or treaties relating to taxation, or the interpretation thereof, in the U.S. or in other countries in which we operate and the results of any tax audits or tax disputes;
•changes in laws and government regulations that may impact the availability and cost of capital and the derivative instruments that hedge certain of our financial risks;
•the ability of suppliers and vendors, including third-party channel providers and broadcasters (including our third-party wireless network provider under our MVNO arrangement), to timely deliver quality products, equipment, software, services and access;
•the availability of attractive programming for our video services and the costs associated with such programming, including retransmission and copyright fees payable to public and private broadcasters;
•uncertainties inherent in the development and integration of new business lines and business strategies;
•our ability to adequately forecast and plan future network requirements, including the costs and benefits associated with our network extension and upgrade programs;
•the availability of capital for the acquisition and/or development of telecommunications networks and services, including property and equipment additions;
•problems we may discover post-closing with the operations, including the internal controls and financial reporting process, of businesses we acquire, such as with respect to the AT&T Acquired Entities and with respect to the Telefónica-Costanica Costa Rica Acquisition;
•the effect of any of the identified material weaknesses in our internal control over financial reporting;
•piracy, targeted vandalism against our networks, and cybersecurity and ransomware threats or other security breaches, including the leakage of sensitive customer data, which could harm our business or reputation;
•the outcome of any pending or threatened litigation;
•the loss of key employees and the availability of qualified personnel;
•the effect of any strikes, work stoppages or other industrial actions that could affect our operations;
•changes in the nature of key strategic relationships with partners and joint venturers;
•our equity capital structure;
•our ability to realize the full value of our intangible assets;
•changes in and compliance with applicable data privacy laws, rules, and regulations;
•our ability to recoup insurance reimbursements and settlements from third-party providers;
•our ability to comply with economic and trade sanctions laws, such as the U.S. Treasury Department’s Office of Foreign Assets Control;
•the impacts of climate change such as rising sea levels or increasing frequency and intensity of certain weather phenomena; and
•events that are outside of our control, such as political conditions and unrest in international markets, terrorist attacks, malicious human acts, hurricanes, volcanoes and other natural disasters, pandemics, including the COVID-19 pandemic, and other similar events.
The broadband distribution and mobile service industries are changing rapidly and, therefore, the forward-looking statements of expectations, plans and intent in this Quarterly Report on Form 10-Q are subject to a significant degree of risk. These forward-looking statements and the above described risks, uncertainties and other factors speak only as of the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based. Readers are cautioned not to place undue reliance on any forward-looking statement.
Overview
General
We are an international provider of fixed, mobile and subsea telecommunications services. We provide,
A.residential and B2B services in:
i.over 20 countries across Latin America and the Caribbean through two of our reportable segments, C&W Caribbean and Networks and C&W Panama;
ii.Puerto Rico, through our reportable segment Liberty Puerto Rico;
iii.Chile, through our reportable segment VTR; and
iv.Costa Rica, through Cabletica and its subsidiary, Telefónica-Costanica Costa Rica; and
B.through our Networks & LatAm business of our C&W Caribbean and Networks segment, (i) B2B services in certain other countries in Latin America and the Caribbean and (ii) wholesale communication services over its subsea and terrestrial fiber optic cable networks that connect overapproximately 40 markets in that region.
Prior to the first quarter of 2021, VTR and Cabletica were collectively one operating segment. As a result of organizational changes during the first quarter of 2021, these operations became separate operating segments. Following the Telefónica-Costa Rica Acquisition on August 9, 2021 (as further described in note 4), Cabletica and Telefónica-Costa Rica now comprise our operating and reportable segment referred to herein as “Costa Rica.” Accordingly, as of September 30, 2021, our reportable segments are as follows:
•C&W Caribbean and Networks;
•C&W Panama;
•Liberty Puerto Rico;
•VTR; and
•Costa Rica.
As a result of the aforementioned segment change, we have revised the presentation of the discussion and analysis set forth below in order to align with the current segment presentation included in our condensed consolidated financial statements.
Effective September 29, 2021, in connection with the pending formation of the Chile JV (as further described in note 8), we began accounting for the Chile JV Entities as “held for sale.” Accordingly, the assets and liabilities of the Chile JV Entities, excluding certain cash balances, are included in assets held for sale and liabilities associated with assets held for sale, respectively, on our September 30, 2021 condensed consolidated balance sheet. Consistent with the applicable guidance, we have not reflected similar reclassifications to exclude Chile JV Entities from continuing operations in our condensed consolidated statements of operations or cash flows. As a result, the discussion and analysis of our results of operations and cash flows set forth below continue to include the amounts associated with the Chile JV Entities. For additional information, see note 8.
At September 30, 2021,March 31, 2022, we (i) owned and operated fixed networks that passed 8,264,2008,463,800 homes and served 6,418,8006,453,300 RGUs comprising 2,848,8002,873,000 broadband internet subscribers, 1,987,5001,966,600 video subscribers and 1,582,5001,613,700 fixed-line telephony subscribers, and (ii) served 7,293,9007,590,000 mobile subscribers.
COVID-19Competition and Management Focus
We are experiencing significant competition from other telecommunications operators and other communication service providers in all of our markets, and in particular in our operations in Chile as competitors continued to expand and upgrade their networks. In December 2019, COVID-19 was reportedaddition, technological advances and product innovations have increased and are likely to continue to increase giving customers several options for the provision of their communications services. In all markets, we seek to differentiate our communications services by focusing on customer service and competitive pricing, and offering quality high-speed connectivity. For example, in Wuhan, China. On March, 11, 2020, the World Health Organization declared the outbreakVTR introduced a “pandemic,” pointing to the sustained risk of further global spread. COVID-19 negativelynew pricing plans for new and existing customers. The significant competition we are experiencing in Chile has adversely impacted our operations relative to periods prior torevenue, RGUs and ARPU. For additional information regarding the pandemic, particularly with respect to revenue associated with B2B and mobile operations within our C&W Caribbean and Networks, C&W Panama and VTR segments.
Given the impactsimpact of COVID-19 continue to evolve, the extent to which COVID-19 may further impact our financial condition or results of operations continues to be uncertain and cannot be predicted at this time. The heightened volatility of global markets resulting from COVID-19 further expose us to risks and uncertainties.
Chile JV
On September 29, 2021, we entered into an agreement with América Móvil to contribute the Chile JV Entities to América Móvil’s Chilean operations, to form the Chile JV that will be owned 50:50 by Liberty Latin America and América Móvil.América Móvil is a telecommunications service provider with over 6.5 million mobile customers. The consummation of the transaction is subject to certain customary closing conditions, including regulatory approvals, and is expected to closechanges in the second half of 2022.
Claro Panama Acquisition.
On September 14, 2021, we entered into a definitive agreement to acquire América Móvil’s operations in Panama in an all-cash transaction based upon an enterprise value of $200 million on a cash-RGUs and debt-free basis. The transaction is subject to certain customary closing conditions, including regulatory approvals, and is expected to close in the first half of 2022.ARPU, see discussion below.
Telefónica-Costa Rica Acquisition
On July 30, 2020, we entered into a definitive agreement to acquire Telefónica S.A.’s operations in Costa Rica in an all-cash transaction based upon an enterprise value of $500 million on a cash- and debt-free basis. On August 9, 2021, we completed the Telefónica-Costa Rica Acquisition. The total purchase price of the Telefónica-Costa Rica Acquisition was $538 million,which includes the impact of certain preliminary working capital adjustments totaling $38 million. The Telefónica-
Costa Rica Acquisition was financed through a combination of debt, existing cash and a $47 million equity contribution from the noncontrolling interest owner of our Cabletica entity as further described in note 17to the condensed consolidated financial statements.
AT&T Acquisition
On October 9, 2019, Liberty Latin America’s wholly-owned subsidiary, Liberty Puerto Rico, agreed to acquire AT&T’s wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands in an all-cash transaction. The AT&T Acquisition closed on October 31, 2020. We continue with our integration efforts of the business of AT&T with our existing operations, and as a result, we expect to incur integration-related costs during the fourth quarter of 2021 of approximately $10 million.
Material Changes in Results of Operations
The comparability of our operating results during the three and nine months ended September 30,March 31, 2022 and 2021 and 2020 is affected by acquisitions a disposal and FX.FX effects. As we use the term, “organic” changes exclude FX and the impacts of acquisitions, and disposals, each as further discussed below. In addition, the comparability of our operating results during the three and nine months ended September 30, 2021 to the corresponding periods in 2020 is affected by the impacts of COVID-19.
In the following discussion, we quantify the estimated impact on the operating results of the periods under comparison that is attributable to acquisitions and disposals.acquisitions. We (i) acquired (a)(i) Telefónica’s operations in Costa Rica in August 2021 and (b) AT&T’s wireless and wireline(ii) 96% of Broadband VI, LLC’s operations in Puerto Rico and the U.S. Virgin Islands in October 2020 and (c) a small B2B operation in the Cayman Islands in July 2020, and (ii) in connection with the AT&T Acquisition, as further described in note 4 to our condensed consolidated financial statements, disposed of certain B2B operations in Puerto Rico in Januaryeffective December, 31 2021. With respect to acquisitions, organic changes and the calculations of our organic change percentages exclude the operating results of an acquired entity during the first 12 months following the date of acquisition. With respect to disposals, the prior-year period operating results of disposed entities are excluded from organic changes and the calculations of our organic change percentages to the same extent that those operations are not included in the current-year period.
Changes in foreign currency exchange rates may have a significant impact on our operating results, as VTR, Costa Rica and certain entities within C&W have functional currencies other than the U.S. dollar. Our primary FX exchange risk relates to the Chilean peso. For example, the average FX rate (utilized to translate our condensed consolidated statements of operations) for the U.S. dollar per one Chilean peso depreciatedappreciated by 1% and 8%11% for the three and nine months ended September 30, 2021,March 31, 2022, as compared to the corresponding periodsperiod in 2020.2021. The impacts to the various components of our results of operations that are attributable to changes in FX are highlighted below. For information concerning our foreign currency risks and applicable foreign currency exchange rates, see Item 3. Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Rates below.
The amounts presented and discussed below represent 100% of the revenue and expenses of each reportable segment and our corporate operations. As we have the ability to control certain subsidiaries that are not wholly-owned, we include 100% of the revenue and expenses of these entities in our condensed consolidated statements of operations despite the fact that third parties own significant interests in these entities. The noncontrolling owners’ interests in the operating results of Costa Rica and(i) certain subsidiaries of (a) C&W and (b) Liberty Puerto Rico, and (ii) Costa Rica are reflected in net earnings or loss attributable to noncontrolling interests in our condensed consolidated statements of operations.
We are subject to inflationary pressures with respect to certain costs and foreign currency exchange risk with respect to costs and expenses that are denominated in currencies other than the respective functional currencies of our reportable segments. Any cost increases that we are not able to pass on to our customers would result in increased pressure on our operating margins.
Consolidated Adjusted OIBDA
On a consolidated basis, Adjusted OIBDA is a non-U.S. GAAP measure. Adjusted OIBDA is the primary measure used by our chief operating decision maker to evaluate segment operating performance. Adjusted OIBDA is also a key factor that is used by our internal decision makers to (i) determine how to allocate resources to segments and (ii) evaluate the effectiveness of our management for purposes of incentive compensation plans.segments. Our internal decision makers believe Adjusted OIBDA is a meaningful measure because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure and allows management to (i) readily view operating trends, (ii) perform analytical comparisons and benchmarking between segments and (iii) identify strategies to improve operating performance in the different
countries in which we operate. We believe our Adjusted OIBDA measure is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measures may not be directly comparable to similar measures used by other public companies. Adjusted OIBDA should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income or loss, net earnings or loss and other U.S. GAAP measures of income or loss.
A reconciliation of total operating income, (loss), the nearest U.S. GAAP measure, to Adjusted OIBDA on a consolidated basis, is presented below for the periods indicated.below.
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions | | | in millions |
| | Operating income (loss) | $ | 137.4 | | | $ | 86.6 | | | $ | 475.8 | | | $ | (11.6) | | |
| Operating income | | Operating income | | $ | 188.3 | | | $ | 181.0 | |
| Share-based compensation expense | Share-based compensation expense | 33.1 | | | 28.0 | | | 88.9 | | | 75.3 | | Share-based compensation expense | | 30.0 | | | 23.0 | |
| Depreciation and amortization | Depreciation and amortization | 253.5 | | | 231.6 | | | 753.4 | | | 661.5 | | Depreciation and amortization | | 214.1 | | | 243.1 | |
| Impairment, restructuring and other operating items, net | Impairment, restructuring and other operating items, net | 22.1 | | | 14.0 | | | 41.3 | | | 331.5 | | Impairment, restructuring and other operating items, net | | 7.8 | | | 2.2 | |
| Consolidated Adjusted OIBDA | Consolidated Adjusted OIBDA | $ | 446.1 | | | $ | 360.2 | | | $ | 1,359.4 | | | $ | 1,056.7 | | Consolidated Adjusted OIBDA | | $ | 440.2 | | | $ | 449.3 | |
The following tables settable sets forth organic and non-organic changes in Adjusted OIBDA for the periodsperiod indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico (a) | | VTR | | Costa Rica | | Corporate | | Intersegment eliminations | | Consolidated |
| | in millions |
| Adjusted OIBDA for the three months ending: | | | | | | | | | | | | | | | |
| September 30, 2020 | $ | 177.3 | | | $ | 43.1 | | | $ | 58.1 | | | $ | 79.1 | | | $ | 13.8 | | | $ | (11.2) | | | $ | — | | | $ | 360.2 | |
| Organic changes related to: | | | | | | | | | | | | | | | |
| Revenue | 17.9 | | | 10.0 | | | 17.4 | | | (10.7) | | | 2.9 | | | 5.4 | | | (1.4) | | | 41.5 | |
| Programming and other direct costs | (5.2) | | | (5.5) | | | (2.1) | | | (3.7) | | | (2.4) | | | — | | | 0.3 | | | (18.6) | |
| Other operating costs and expenses | (6.6) | | | 0.3 | | | (5.2) | | | (0.2) | | | (2.2) | | | (8.9) | | | 1.1 | | | (21.7) | |
| Non-organic increases (decreases): | | | | | | | | | | | | | | | |
| FX | (1.8) | | | — | | | — | | | 0.6 | | | 0.8 | | | — | | | — | | | (0.4) | |
| Acquisitions/disposition, net | — | | | — | | | 74.0 | | | — | | | 11.1 | | | — | | | — | | | 85.1 | |
| September 30, 2021 | $ | 181.6 | | | $ | 47.9 | | | $ | 142.2 | | | $ | 65.1 | | | $ | 24.0 | | | $ | (14.7) | | | $ | — | | | $ | 446.1 | |
(a)The non-organic change to Adjusted OIBDA resulting from an acquisition includes $1 million of net roaming revenue, which represents a decrease from the previous quarters of 2021 due primarily to an increase in outbound roaming expense.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico (a) | | VTR | | Costa Rica | | Corporate | | Intersegment eliminations | | Consolidated |
| | in millions |
| Adjusted OIBDA for the nine months ending: | | | | | | | | | | | | | | | |
| September 30, 2020 | $ | 531.0 | | | $ | 125.8 | | | $ | 161.0 | | | $ | 232.3 | | | $ | 40.3 | | | $ | (33.7) | | | $ | — | | | $ | 1,056.7 | |
| Organic changes related to: | | | | | | | | | | | | | | | |
| Revenue | 34.1 | | | 9.6 | | | 58.4 | | | (38.2) | | | 12.5 | | | 16.2 | | | (3.2) | | | 89.4 | |
| Programming and other direct costs | (3.6) | | | (9.1) | | | (6.4) | | | (6.0) | | | (7.7) | | | — | | | 0.4 | | | (32.4) | |
| Other operating costs and expenses | (4.7) | | | 11.2 | | | (12.1) | | | 0.1 | | | (4.2) | | | (20.2) | | | 2.8 | | | (27.1) | |
| Non-organic increases (decreases): | | | | | | | | | | | | | | | |
| FX | (6.5) | | | — | | | — | | | 16.1 | | | (1.2) | | | — | | | — | | | 8.4 | |
| Acquisitions/disposition, net | 0.7 | | | — | | | 252.6 | | | — | | | 11.1 | | | — | | | — | | | 264.4 | |
| September 30, 2021 | $ | 551.0 | | | $ | 137.5 | | | $ | 453.5 | | | $ | 204.3 | | | $ | 50.8 | | | $ | (37.7) | | | $ | — | | | $ | 1,359.4 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
(a)The non-organic change to Adjusted OIBDA resulting from an acquisition includes $17 million of net roaming revenue. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C&W Caribbean and Networks | | C&W Panama | | Liberty Puerto Rico | | VTR | | Costa Rica | | Corporate | | Intersegment eliminations | | Consolidated |
| | in millions |
| Adjusted OIBDA for the three months ending: | | | | | | | | | | | | | | | |
| March 31, 2021 | $ | 181.3 | | | $ | 44.0 | | | $ | 149.9 | | | $ | 70.5 | | | $ | 14.1 | | | $ | (10.5) | | | $ | — | | | $ | 449.3 | |
| Organic changes related to: | | | | | | | | | | | | | | | |
| Revenue | 22.4 | | | (0.1) | | | 5.1 | | | (19.6) | | | 1.0 | | | 0.2 | | | (1.4) | | | 7.6 | |
| Programming and other direct costs | (5.3) | | | (0.3) | | | (4.9) | | | (0.6) | | | 0.1 | | | — | | | 0.2 | | | (10.8) | |
| Other operating costs and expenses | (3.4) | | | (3.1) | | | (6.3) | | | 1.8 | | | (1.7) | | | (3.5) | | | 1.2 | | | (15.0) | |
| Non-organic increases (decreases): | | | | | | | | | | | | | | | |
| FX | (2.5) | | | — | | | — | | | (5.6) | | | (0.7) | | | — | | | — | | | (8.8) | |
| Acquisitions | — | | | — | | | 0.5 | | | — | | | 17.4 | | | — | | | — | | | 17.9 | |
| March 31, 2022 | $ | 192.5 | | | $ | 40.5 | | | $ | 144.3 | | | $ | 46.5 | | | $ | 30.2 | | | $ | (13.8) | | | $ | — | | | $ | 440.2 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Adjusted OIBDA Margin
The following table sets forth the Adjusted OIBDA margin (Adjusted OIBDA divided by revenue) of each of our reportable segments:
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | % | | | % |
| | C&W Caribbean and Networks | C&W Caribbean and Networks | 41.8 | | | 42.0 | | | 42.4 | | | 41.5 | | C&W Caribbean and Networks | | 43.3 | | | 42.2 | |
| C&W Panama | C&W Panama | 37.2 | | | 36.2 | | | 36.3 | | | 34.1 | | C&W Panama | | 31.8 | | | 34.6 | |
| Liberty Puerto Rico | Liberty Puerto Rico | 39.6 | | | 50.8 | | | 42.0 | | | 49.1 | | Liberty Puerto Rico | | 39.1 | | | 41.5 | |
| VTR | VTR | 33.7 | | | 39.2 | | | 33.3 | | | 38.6 | | VTR | | 27.2 | | | 33.5 | |
| Costa Rica | Costa Rica | 31.2 | | | 39.3 | | | 34.0 | | | 39.0 | | Costa Rica | | 28.1 | | | 39.0 | |
Adjusted OIBDA margin is impacted by organic changes in revenue, programming and other direct costs of services and other operating costs and expenses, as further discussed below. The decreases in the Adjusted OIBDA margin for each comparative period presented for both Liberty Puerto Rico and Costa Rica are primarily related to the inclusion of Liberty Mobile and Telefónica-Costa Rica operations following the AT&T Acquisition and Telefónica-Costa Rica Acquisition, respectively, that each generate a lower Adjusted OIBDA margin relative to the legacy operations. In addition, the decrease in the Adjusted OIBDA for Liberty Puerto Rico during the third quarter of 2021 relative to the nine months ended September 30, 2021, is primarily driven by an increase in roaming expense, and negative margin on handset sales in the third quarter. The decreases in the Adjusted OIBDA margin for VTR areis primarily related to a decline in revenue, as further discussed below.below and in the Overview above. The decrease in the Adjusted OIBDA margin for Costa Rica is primarily related to the inclusion of the Telefónica Costa Rica operations following the Telefónica Costa Rica Acquisition, which generates lower Adjusted OIBDA margin relative to the legacy operations.
Revenue
All of our segments derive their revenue primarily from (i) residential fixed services, including video, broadband internet and fixed-line telephony, (ii) residential mobile services, and (iii) B2B services. C&W Caribbean and Networks also provides wholesale communication services over its subsea and terrestrial fiber optic cable networks.
While not specifically discussed in the below explanations of the changes in revenue, we are experiencing significant competition in all of our markets. This competition has an adverse impact on our ability to increase or maintain our RGUs and/or ARPU.
Variances in the subscription revenue that we receive from our customers are a function of (i) changes in the number of RGUs or mobile subscribers during the period and (ii) changes in ARPU. Changes in ARPU can be attributable to (i) changes in prices, (ii) changes in bundling or promotional discounts, (iii) changes in the tier of services selected, (iv) variances in subscriber usage patterns, and (v) the overall mix of fixed and mobile products during the period. In the following discussion, we discuss ARPU changes in terms of the net impact of the above factors on the ARPU that is derived from our video, broadband internet, fixed-line telephony and mobile products.
For the comparisons below, revenue variances, including changes in ARPU, were also influenced by the impacts of COVID-19, as further discussed below and in Overview above.
The following tables settable sets forth the organic and non-organic changes in revenue by reportable segment for the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Three months ended September 30, | | Increase (decrease) | | FX | | Acquisitions (disposition), net | | Organic |
| | 2021 | | 2020 | | | | |
| | in millions |
| | | | | | | | | | | |
| C&W Caribbean and Networks | $ | 434.5 | | | $ | 421.7 | | | $ | 12.8 | | | $ | (5.1) | | | $ | — | | | $ | 17.9 | |
| C&W Panama | 128.9 | | | 118.9 | | | 10.0 | | | — | | | — | | | 10.0 | |
| Liberty Puerto Rico | 359.0 | | | 114.4 | | | 244.6 | | | — | | | 227.2 | | | 17.4 | |
| VTR | 193.1 | | | 201.8 | | | (8.7) | | | 2.0 | | | — | | | (10.7) | |
| Costa Rica | 76.9 | | | 35.1 | | | 41.8 | | | (1.7) | | | 40.6 | | | 2.9 | |
| Corporate (a) | 5.4 | | | — | | | 5.4 | | | — | | | — | | | 5.4 | |
| Intersegment eliminations | (5.8) | | | (4.4) | | | (1.4) | | | — | | | — | | | (1.4) | |
| Total | $ | 1,192.0 | | | $ | 887.5 | | | $ | 304.5 | | | $ | (4.8) | | | $ | 267.8 | | | $ | 41.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Nine months ended September 30, | | Increase (decrease) | | FX | | Acquisitions (disposition), net | | Organic |
| | 2021 | | 2020 | | | | |
| | in millions |
| | | | | | | | | | | |
| C&W Caribbean and Networks | $ | 1,298.5 | | | $ | 1,278.6 | | | $ | 19.9 | | | $ | (18.1) | | | $ | 3.9 | | | $ | 34.1 | |
| C&W Panama | 379.0 | | | 369.4 | | | 9.6 | | | — | | | — | | | 9.6 | |
| Liberty Puerto Rico | 1,080.7 | | | 328.1 | | | 752.6 | | | — | | | 694.2 | | | 58.4 | |
| VTR | 612.7 | | | 601.3 | | | 11.4 | | | 49.6 | | | — | | | (38.2) | |
| Costa Rica | 149.4 | | | 103.4 | | | 46.0 | | | (7.1) | | | 40.6 | | | 12.5 | |
| Corporate (a) | 16.2 | | | — | | | 16.2 | | | — | | | — | | | 16.2 | |
| Intersegment eliminations | (16.6) | | | (13.4) | | | (3.2) | | | — | | | — | | | (3.2) | |
| Total | $ | 3,519.9 | | | $ | 2,667.4 | | | $ | 852.5 | | | $ | 24.4 | | | $ | 738.7 | | | $ | 89.4 | |
(a)Amounts relate to services we provide for mobile handset insurance following the closing of the AT&T Acquisition.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Increase (decrease) | | Increase (decrease) from: |
| | 2022 | | 2021 | | | FX | | Acquisitions | | Organic |
| | in millions |
| | | | | | | | | | | |
| C&W Caribbean and Networks | $ | 444.9 | | | $ | 429.8 | | | $ | 15.1 | | | $ | (7.3) | | | $ | — | | | $ | 22.4 | |
| C&W Panama | 127.2 | | | 127.3 | | | (0.1) | | | — | | | — | | | (0.1) | |
| Liberty Puerto Rico | 369.3 | | | 361.3 | | | 8.0 | | | — | | | 2.9 | | | 5.1 | |
| VTR | 170.8 | | | 210.3 | | | (39.5) | | | (19.9) | | | — | | | (19.6) | |
| Costa Rica | 107.4 | | | 36.2 | | | 71.2 | | | (1.8) | | | 72.0 | | | 1.0 | |
| Corporate | 5.6 | | | 5.4 | | | 0.2 | | | — | | | — | | | 0.2 | |
| Intersegment eliminations | (6.5) | | | (5.1) | | | (1.4) | | | — | | | — | | | (1.4) | |
| Total | $ | 1,218.7 | | | $ | 1,165.2 | | | $ | 53.5 | | | $ | (29.0) | | | $ | 74.9 | | | $ | 7.6 | |
C&W Caribbean and Networks. C&W Caribbean and Networks’sNetworks’ revenue by major category is set forth below:
| | | | Three months ended September 30, | | Increase (decrease) | | Three months ended March 31, | | Increase (decrease) |
| | | 2021 | | 2020 | | $ | | % | | 2022 | | 2021 | | $ | | % |
| | | in millions, except percentages | | in millions, except percentages |
| Residential revenue: | Residential revenue: | | Residential revenue: | |
| Residential fixed revenue: | Residential fixed revenue: | | Residential fixed revenue: | |
| Subscription revenue: | Subscription revenue: | | Subscription revenue: | |
| Video | Video | $ | 32.6 | | | $ | 34.7 | | | $ | (2.1) | | | (6) | | Video | $ | 32.6 | | | $ | 34.3 | | | $ | (1.7) | | | (5) | |
| Broadband internet | Broadband internet | 68.9 | | | 62.7 | | | 6.2 | | | 10 | | Broadband internet | 70.6 | | | 66.6 | | | 4.0 | | | 6 | |
| Fixed-line telephony | Fixed-line telephony | 16.6 | | | 18.3 | | | (1.7) | | | (9) | | Fixed-line telephony | 18.5 | | | 16.5 | | | 2.0 | | | 12 | |
| Total subscription revenue | Total subscription revenue | 118.1 | | | 115.7 | | | 2.4 | | | 2 | | Total subscription revenue | 121.7 | | | 117.4 | | | 4.3 | | | 4 | |
| Non-subscription revenue | Non-subscription revenue | 10.6 | | | 10.5 | | | 0.1 | | | 1 | | Non-subscription revenue | 9.1 | | | 8.5 | | | 0.6 | | | 7 | |
| Total residential fixed revenue | Total residential fixed revenue | 128.7 | | | 126.2 | | | 2.5 | | | 2 | | Total residential fixed revenue | 130.8 | | | 125.9 | | | 4.9 | | | 4 | |
| Residential mobile revenue: | Residential mobile revenue: | | | | | | | | Residential mobile revenue: | | | | | | | |
| Service revenue | Service revenue | 76.1 | | | 71.6 | | | 4.5 | | | 6 | | Service revenue | 76.5 | | | 71.8 | | | 4.7 | | | 7 | |
| Interconnect, inbound roaming, equipment sales and other (a) | Interconnect, inbound roaming, equipment sales and other (a) | 12.8 | | | 10.7 | | | 2.1 | | | 20 | | Interconnect, inbound roaming, equipment sales and other (a) | 14.5 | | | 13.6 | | | 0.9 | | | 7 | |
| Total residential mobile revenue | Total residential mobile revenue | 88.9 | | | 82.3 | | | 6.6 | | | 8 | | Total residential mobile revenue | 91.0 | | | 85.4 | | | 5.6 | | | 7 | |
| Total residential revenue | Total residential revenue | 217.6 | | | 208.5 | | | 9.1 | | | 4 | | Total residential revenue | 221.8 | | | 211.3 | | | 10.5 | | | 5 | |
| B2B revenue: | B2B revenue: | | B2B revenue: | |
| Service revenue | Service revenue | 153.8 | | | 151.2 | | | 2.6 | | | 2 | | Service revenue | 158.2 | | | 150.8 | | | 7.4 | | | 5 | |
| Subsea network revenue | Subsea network revenue | 63.1 | | | 62.0 | | | 1.1 | | | 2 | | Subsea network revenue | 64.9 | | | 67.7 | | | (2.8) | | | (4) | |
| Total B2B revenue | Total B2B revenue | 216.9 | | | 213.2 | | | 3.7 | | | 2 | | Total B2B revenue | 223.1 | | | 218.5 | | | 4.6 | | | 2 | |
| Total | Total | $ | 434.5 | | | $ | 421.7 | | | $ | 12.8 | | | 3 | | Total | $ | 444.9 | | | $ | 429.8 | | | $ | 15.1 | | | 4 | |
(a)Revenue from inbound roaming was $6 millionand $5 million, and $3 million, respectively.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, | | Increase (decrease) |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 100.3 | | | $ | 107.5 | | | $ | (7.2) | | | (7) | |
| Broadband internet | 203.2 | | | 185.1 | | | 18.1 | | | 10 | |
| Fixed-line telephony | 50.2 | | | 56.9 | | | (6.7) | | | (12) | |
| Total subscription revenue | 353.7 | | | 349.5 | | | 4.2 | | | 1 | |
| Non-subscription revenue | 32.7 | | | 32.3 | | | 0.4 | | | 1 | |
| Total residential fixed revenue | 386.4 | | | 381.8 | | | 4.6 | | | 1 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 222.9 | | | 218.0 | | | 4.9 | | | 2 | |
| Interconnect, inbound roaming, equipment sales and other (a) | 38.2 | | | 33.3 | | | 4.9 | | | 15 | |
| Total residential mobile revenue | 261.1 | | | 251.3 | | | 9.8 | | | 4 | |
| Total residential revenue | 647.5 | | | 633.1 | | | 14.4 | | | 2 | |
| B2B revenue: | | | | | | | |
| Service revenue | 457.4 | | | 451.4 | | | 6.0 | | | 1 | |
| Subsea network revenue | 193.6 | | | 194.1 | | | (0.5) | | | — | |
| Total B2B revenue | 651.0 | | | 645.5 | | | 5.5 | | | 1 | |
| Total | $ | 1,298.5 | | | $ | 1,278.6 | | | $ | 19.9 | | | 2 | |
(a) Revenue from inbound roaming was $16 millionand $11 million, respectively.
The details of the changes in C&W Caribbean and Networks’sNetworks’ revenue during the three and nine months ended September 30, 2021,March 31, 2022, as compared to the corresponding periodsperiod in 2020,2021, are set forth below (in millions):
| | | | | | | | | | | |
| Three-month comparison | | Nine-month comparison |
Increase (decrease) in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | $ | 9.1 | | | $ | 25.0 | |
| ARPU (b) | (4.7) | | | (14.8) | |
| Increase in residential fixed non-subscription revenue | 0.3 | | | 0.9 | |
Total increase in residential fixed revenue | 4.7 | | | 11.1 | |
| Increase in residential mobile service revenue (c) | 5.4 | | | 9.1 | |
| Increase in residential mobile interconnect, inbound roaming, equipment sales and other revenue (d) | 2.2 | | | 5.4 | |
| Increase in B2B service revenue (e) | 4.1 | | | 9.3 | |
| Increase (decrease) in B2B subsea network revenue (f) | 1.5 | | | (0.8) | |
Total organic increase | 17.9 | | | 34.1 | |
| Impact of an acquisition | — | | | 3.9 | |
| Impact of FX | (5.1) | | | (18.1) | |
| Total | $ | 12.8 | | | $ | 19.9 | |
| | | | | | | |
| | | |
Increase (decrease)in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | | | $ | 7.1 | |
| ARPU (b) | | | (0.8) | |
| Increase in residential fixed non-subscription revenue | | | 0.7 | |
Totalincrease in residential fixed revenue | | | 7.0 | |
| Increase in residential mobile service revenue (c) | | | 6.0 | |
| Increase in residential mobile interconnect, inbound roaming, equipment sales and other revenue | | | 1.0 | |
| Increase in B2B service revenue (d) | | | 10.5 | |
| Decrease in B2B subsea network revenue (e) | | | (2.1) | |
| Total organic increase | | | 22.4 | |
| Impact of FX | | | (7.3) | |
| Total | | | $ | 15.1 | |
(a)The increases areincreaseis primarily attributable to higher average broadband internet and fixed-line telephony RGUs.
(b)The decreases aredecreaseis primarily due to lower ARPU from video services, partially offset by higher ARPU from fixed-line telephony and video services.telephony.
(c)The increases areincreaseis attributable to (i) higher ARPU from mobile services, which were driven by increases in prepaid phone usage, mostly a result of relaxed COVID-19-related travel restrictions, and (ii) higher average numbers of mobile subscribers, mostly due to increasesan increase in sales initiatives.initiatives and growth from fixed-mobile convergence efforts.
(d)The increases are primarily attributable to the net effect of (i) increases in inbound roaming revenue, primarily related to the relaxing of travel restrictions associated with COVID-19,increase is primarily due to higher revenue from (i) certain non-recurring B2B contracts, and (ii) during the nine-month comparison, a $2 million increase related to the settlement of a minimum commitment guarantee associated with inbound roaming during the second quarter of 2021.fixed and mobile services.
(e)The increases aredecrease is primarily due to (i) higher revenues from mobile and fixed services, partially due to the recovery of reduced or suspended service across our markets as a result of the COVID-19 lockdowns, and (ii) higher wholesale call volumes.
(f)The increase for the three-month comparison is primarily due to the net effect of (i) an increasenegative impact associated with continued demand for telecommunications capacity on our subsea network,the recognition of deferred revenue and (ii) a decrease related to the expirationpenalties upon termination of long-term right-of-usecustomer contracts including the related decline in operations and maintenance-related revenues. The decrease for the nine-month comparison is primarily attributable to the net effect of(i) a decrease related to $10 million recognized on a cash basis during the first quarter of 2020 for services provided to a significant customer,2022 and 2021, partially offset by (ii) a $6 million increase associated with the renegotiation of a customer contract recognized during the first quarter of 2021, and (iii) anincrease associated with continuedincreased demand for telecommunications capacity on our subsea network.
C&W Panama. C&W Panama’s revenue by major category is set forth below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Increase (decrease) |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 6.5 | | | $ | 6.1 | | | $ | 0.4 | | | 7 | |
| Broadband internet | 11.5 | | | 9.5 | | | 2.0 | | | 21 | |
| Fixed-line telephony | 4.3 | | | 4.3 | | | — | | | — | |
| Total subscription revenue | 22.3 | | | 19.9 | | | 2.4 | | | 12 | |
| Non-subscription revenue | 2.3 | | | 2.6 | | | (0.3) | | | (12) | |
| Total residential fixed revenue | 24.6 | | | 22.5 | | | 2.1 | | | 9 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 38.6 | | | 39.1 | | | (0.5) | | | (1) | |
| Interconnect, inbound roaming, equipment sales and other (a) | 11.6 | | | 10.1 | | | 1.5 | | | 15 | |
| Total residential mobile revenue | 50.2 | | | 49.2 | | | 1.0 | | | 2 | |
| Total residential revenue | 74.8 | | | 71.7 | | | 3.1 | | | 4 | |
| | | | | | | |
| B2B service revenue | 54.1 | | | 47.2 | | | 6.9 | | | 15 | |
| Total | $ | 128.9 | | | $ | 118.9 | | | $ | 10.0 | | | 8 | |
(a)Revenue from inbound roaming was$1 million and nil, respectively.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, | | Increase (decrease) |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 18.9 | | | $ | 20.9 | | | $ | (2.0) | | | (10) | |
| Broadband internet | 33.0 | | | 28.6 | | | 4.4 | | | 15 | |
| Fixed-line telephony | 12.8 | | | 14.2 | | | (1.4) | | | (10) | |
| Total subscription revenue | 64.7 | | | 63.7 | | | 1.0 | | | 2 | |
| Non-subscription revenue | 7.2 | | | 9.0 | | | (1.8) | | | (20) | |
| Total residential fixed revenue | 71.9 | | | 72.7 | | | (0.8) | | | (1) | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 117.3 | | | 120.1 | | | (2.8) | | | (2) | |
| Interconnect, inbound roaming, equipment sales and other (a) | 33.2 | | | 31.3 | | | 1.9 | | | 6 | |
| Total residential mobile revenue | 150.5 | | | 151.4 | | | (0.9) | | | (1) | |
| Total residential revenue | 222.4 | | | 224.1 | | | (1.7) | | | (1) | |
| | | | | | | |
| B2B service revenue | 156.6 | | | 145.3 | | | 11.3 | | | 8 | |
| Total | $ | 379.0 | | | $ | 369.4 | | | $ | 9.6 | | | 3 | |
(a)Revenue from inbound roaming was $2 million and $1 million respectively. | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Increase (decrease) |
| | 2022 | | 2021 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 7.1 | | | $ | 6.2 | | | $ | 0.9 | | | 15 | |
| Broadband internet | 12.4 | | | 10.7 | | | 1.7 | | | 16 | |
| Fixed-line telephony | 4.2 | | | 4.3 | | | (0.1) | | | (2) | |
| Total subscription revenue | 23.7 | | | 21.2 | | | 2.5 | | | 12 | |
| Non-subscription revenue | 2.2 | | | 2.5 | | | (0.3) | | | (12) | |
| Total residential fixed revenue | 25.9 | | | 23.7 | | | 2.2 | | | 9 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 43.0 | | | 44.6 | | | (1.6) | | | (4) | |
| Interconnect, inbound roaming, equipment sales and other | 10.4 | | | 10.3 | | | 0.1 | | | 1 | |
| Total residential mobile revenue | 53.4 | | | 54.9 | | | (1.5) | | | (3) | |
| Total residential revenue | 79.3 | | | 78.6 | | | 0.7 | | | 1 | |
| | | | | | | |
| B2B service revenue | 47.9 | | | 48.7 | | | (0.8) | | | (2) | |
| Total | $ | 127.2 | | | $ | 127.3 | | | $ | (0.1) | | | — | |
The details of the changes in C&W Panama’s revenue during the three and nine months ended September 30, 2021,March 31, 2022, as compared to the corresponding periodsperiod in 2020,2021, are set forth below (in millions):
| | | | | | | | | | | |
| Three-month comparison | | Nine-month comparison |
Increase (decrease) in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | $ | 3.3 | | | $ | 6.1 | |
| ARPU (b) | (0.9) | | | (5.1) | |
| Decrease in residential fixed non-subscription revenue (c) | (0.3) | | | (1.8) | |
Total increase (decrease) in residential fixed revenue | 2.1 | | | (0.8) | |
Decrease in residential mobile service revenue (d) | (0.5) | | | (2.8) | |
Increase in residential mobile interconnect, inbound roaming, equipment sales and other revenue (e) | 1.5 | | | 1.9 | |
Increase in B2B service revenue (f) | 6.9 | | | 11.3 | |
| Total organic increase | $ | 10.0 | | | $ | 9.6 | |
| | | | | | | |
| | | |
| Increase (decrease) in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | | | $ | 3.4 | |
| ARPU | | | (0.9) | |
Decreasein residential fixed non-subscription revenue | | | (0.3) | |
Totalincreasein residential fixed revenue | | | 2.2 | |
Decreasein residential mobile service revenue (b) | | | (1.6) | |
Increasein residential mobile interconnect, inbound roaming, equipment sales and other revenue | | | 0.1 | |
Decreasein B2B service revenue (c) | | | (0.8) | |
| Total organic decrease | | | $ | (0.1) | |
| | | |
(a)The increases areincreaseis primarily attributable to higher average broadband internet and video RGUs.
(b)The decreases are primarily due to lower ARPU from fixed-line telephony, broadband internet and video services.
(c)The decreases are primarily attributable to lower volumes of interconnect revenue and, for the nine-month comparison, a decrease in payphone revenue.
(d)The decreases aredecreaseis primarily due to the net effect of (i) lower ARPU from prepaid mobile services,mainly attributable to prepaid plans as a result of the termination of certain value-added serviceslower recharging activity, and(ii) higher average numbers of postpaid mobile subscribers.
(e)(c)The increases aredecrease is primarily attributable to (i) higher volumes of handset sales, as COVID-19 related lockdowns in 2020 negatively impacted customers’ ability to purchase handsets and(ii) an increase in inbound roaming revenue, primarily relateddue to the relaxingnet effect of travel restrictions associated with COVID-19.(i) a decrease in the volume of certain government-related projects, (ii) higher revenue from data services and (iii) increased mobile services revenue.
(f)The increases are primarily due to(i) increases driven by certain government-related projects, some of which were put on hold during 2020 due to the impact of COVID-19 and(ii) higher revenues from mobile services.
Liberty Puerto Rico. Liberty Puerto Rico’s revenue by major category is set forth below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Increase |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 39.4 | | | $ | 37.1 | | | $ | 2.3 | | | 6 | |
| Broadband internet | 64.1 | | | 52.5 | | | 11.6 | | | 22 | |
| Fixed-line telephony | 7.1 | | | 6.5 | | | 0.6 | | | 9 | |
| Total subscription revenue | 110.6 | | | 96.1 | | | 14.5 | | | 15 | |
| Non-subscription revenue | 5.0 | | | 4.2 | | | 0.8 | | | 19 | |
| Total residential fixed revenue | 115.6 | | | 100.3 | | | 15.3 | | | 15 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 114.2 | | | — | | | 114.2 | | | N.M. |
| Interconnect, inbound roaming, equipment sales and other (a) | 70.8 | | | — | | | 70.8 | | | N.M. |
| Total residential mobile revenue | 185.0 | | | — | | | 185.0 | | | N.M. |
| Total residential revenue | 300.6 | | | 100.3 | | | 200.3 | | | 200 | |
| B2B service revenue | 51.0 | | | 14.1 | | | 36.9 | | | 262 | |
| Other revenue (b) | 7.4 | | | — | | | 7.4 | | | N.M. |
| Total | $ | 359.0 | | | $ | 114.4 | | | $ | 244.6 | | | 214 | |
N.M. — Not Meaningful.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Increase (decrease) |
| | 2022 | | 2021 | | $ | | % |
| | in millions, except percentages |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 39.7 | | | $ | 38.6 | | | $ | 1.1 | | | 3 | |
| Broadband internet | 68.9 | | | 61.4 | | | 7.5 | | | 12 | |
| Fixed-line telephony | 7.2 | | | 7.0 | | | 0.2 | | | 3 | |
| Total subscription revenue | 115.8 | | | 107.0 | | | 8.8 | | | 8 | |
| Non-subscription revenue | 5.4 | | | 4.2 | | | 1.2 | | | 29 | |
| Total residential fixed revenue | 121.2 | | | 111.2 | | | 10.0 | | | 9 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 116.8 | | | 116.5 | | | 0.3 | | | — | |
| Interconnect, inbound roaming, equipment sales and other (a) | 63.2 | | | 73.0 | | | (9.8) | | | (13) | |
| Total residential mobile revenue | 180.0 | | | 189.5 | | | (9.5) | | | (5) | |
| Total residential revenue | 301.2 | | | 300.7 | | | 0.5 | | | — | |
| B2B service revenue | 57.8 | | | 52.1 | | | 5.7 | | | 11 | |
| Other revenue (b) | 10.3 | | | 8.5 | | | 1.8 | | | 21 | |
| Total | $ | 369.3 | | | $ | 361.3 | | | $ | 8.0 | | | 2 | |
(a)Revenue from inbound roaming was $1817 million and nil, respectively.
(b)Amount relates to funds received from the FCC primarily related to Liberty Mobile following the closing of the AT&T Acquisition.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, | | Increase |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 117.2 | | | $ | 109.1 | | | $ | 8.1 | | | 7 | |
| Broadband internet | 188.7 | | | 147.2 | | | 41.5 | | | 28 | |
| Fixed-line telephony | 21.2 | | | 18.6 | | | 2.6 | | | 14 | |
| Total subscription revenue | 327.1 | | | 274.9 | | | 52.2 | | | 19 | |
| Non-subscription revenue | 14.1 | | | 12.6 | | | 1.5 | | | 12 | |
| Total residential fixed revenue | 341.2 | | | 287.5 | | | 53.7 | | | 19 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 346.3 | | | — | | | 346.3 | | | N.M. |
| Interconnect, inbound roaming, equipment sales and other (a) | 213.8 | | | — | | | 213.8 | | | N.M. |
| Total residential mobile revenue | 560.1 | | | — | | | 560.1 | | | N.M. |
| Total residential revenue | 901.3 | | | 287.5 | | | 613.8 | | | 213 | |
| B2B service revenue | 155.0 | | | 40.6 | | | 114.4 | | | 282 | |
| Other revenue (b) | 24.4 | | | — | | | 24.4 | | | N.M. |
| Total | $ | 1,080.7 | | | $ | 328.1 | | | $ | 752.6 | | | 229 | |
N.M. — Not Meaningful.
(a)Revenue from inbound roaming was $56and $20 million, and nil, respectively.
(b)Amount relates to funds received from the FCC primarily related to Liberty Mobile following the closing of the AT&T Acquisition.
The details of the changes in Liberty Puerto Rico’s revenue during the three and nine months ended September 30, 2021,March 31, 2022, as compared to the corresponding periods in 2020,2021, are set forth below (in millions):
| | | | | | | | | | | |
| Three-month comparison | | Nine-month comparison |
| Increase in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | $ | 12.9 | | | $ | 42.3 | |
| ARPU (b) | 1.6 | | | 9.9 | |
| Increase in residential fixed non-subscription revenue | 0.8 | | | 1.5 | |
Total increase in residential fixed revenue | 15.3 | | | 53.7 | |
| Increase in B2B service (c) | 0.4 | | | 3.0 | |
| Increase in other revenue (d) | 1.7 | | | 1.7 | |
| Total organic increase | 17.4 | | | 58.4 | |
| Impact of an acquisition and a disposition, net | 227.2 | | | 694.2 | |
| Total | $ | 244.6 | | | $ | 752.6 | |
| | | | | | | |
| | | |
| Increase (decrease) in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | | | $ | 7.5 | |
| ARPU | | | (1.0) | |
| Increase in residential fixed non-subscription revenue | | | 0.6 | |
Totalincrease in residential fixed revenue | | | 7.1 | |
Increasein residential mobile service revenue (b) | | | 0.3 | |
| Decrease in residential mobile interconnect, inbound roaming, equipment sales and other revenue (c) | | | (9.8) | |
| Increase in B2B service (d) | | | 5.7 | |
| Increase in other revenue (e) | | | 1.8 | |
| Total organic increase | | | 5.1 | |
| Impact of an acquisition | | | 2.9 | |
| Total | | | $ | 8.0 | |
(a)The increases areincrease is primarily attributable to higher average broadband internet and video RGUs. The higher average broadband internet RGUs are partially due to higher demand as a result of COVID-19 work-from-home mandates, which subsequently led to increased purchases of video products as a result of bundling offers.
(b)The increases areincrease is primarily due to a higher average number of mobile subscribers that was mostly offset by lower ARPU from broadband internetmobile services. In addition, the nine-month comparison includes the impact resulting from $2 million of credits provided to customers during 2020 in connection with the earthquakes that impacted Puerto Rico in January 2020.
(c)The increase for the nine-month comparisondecrease is primarily due to (i) new customershigher promotions associated with handset sales, and (ii) the impact resulting from credits issued to customers in 2020 as a result of suspended service due to COVID-19.lowerinbound roaming revenue.
(d)The increases areincrease is primarily due to higher revenue from equipment sales and mobile services.
(e)The increase is primarily attributable to funds received from the FCC to continue to expand and improve our fixed network in Puerto Rico.
VTR. VTR’s revenue by major category is set forth below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Increase (decrease) |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 72.6 | | | $ | 72.2 | | | $ | 0.4 | | | 1 | |
| Broadband internet | 75.8 | | | 84.5 | | | (8.7) | | | (10) | |
| Fixed-line telephony | 19.4 | | | 18.0 | | | 1.4 | | | 8 | |
| Total subscription revenue | 167.8 | | | 174.7 | | | (6.9) | | | (4) | |
| Non-subscription revenue | 3.8 | | | 4.0 | | | (0.2) | | | (5) | |
| Total residential fixed revenue | 171.6 | | | 178.7 | | | (7.1) | | | (4) | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 11.5 | | | 13.8 | | | (2.3) | | | (17) | |
| Interconnect, inbound roaming, equipment sales and other | 1.7 | | | 2.0 | | | (0.3) | | | (15) | |
| Total residential mobile revenue | 13.2 | | | 15.8 | | | (2.6) | | | (16) | |
| Total residential revenue | 184.8 | | | 194.5 | | | (9.7) | | | (5) | |
| | | | | | | |
| B2B service revenue | 8.3 | | | 7.3 | | | 1.0 | | | 14 | |
| Total | $ | 193.1 | | | $ | 201.8 | | | $ | (8.7) | | | (4) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Decrease |
| | 2022 | | 2021 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 65.9 | | | $ | 78.3 | | | $ | (12.4) | | | (16) | |
| Broadband internet | 65.8 | | | 84.8 | | | (19.0) | | | (22) | |
| Fixed-line telephony | 17.9 | | | 20.0 | | | (2.1) | | | (11) | |
| Total subscription revenue | 149.6 | | | 183.1 | | | (33.5) | | | (18) | |
| Non-subscription revenue | 3.1 | | | 3.4 | | | (0.3) | | | (9) | |
| Total residential fixed revenue | 152.7 | | | 186.5 | | | (33.8) | | | (18) | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 9.3 | | | 13.2 | | | (3.9) | | | (30) | |
| Interconnect, inbound roaming, equipment sales and other | 1.1 | | | 2.3 | | | (1.2) | | | (52) | |
| Total residential mobile revenue | 10.4 | | | 15.5 | | | (5.1) | | | (33) | |
| Total residential revenue | 163.1 | | | 202.0 | | | (38.9) | | | (19) | |
| | | | | | | |
| B2B service revenue | 7.7 | | | 8.3 | | | (0.6) | | | (7) | |
| Total | $ | 170.8 | | | $ | 210.3 | | | $ | (39.5) | | | (19) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, | | Increase (decrease) |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 228.3 | | | $ | 214.8 | | | $ | 13.5 | | | 6 | |
| Broadband internet | 245.3 | | | 247.2 | | | (1.9) | | | (1) | |
| Fixed-line telephony | 59.3 | | | 55.2 | | | 4.1 | | | 7 | |
| Total subscription revenue | 532.9 | | | 517.2 | | | 15.7 | | | 3 | |
| Non-subscription revenue | 11.2 | | | 13.6 | | | (2.4) | | | (18) | |
| Total residential fixed revenue | 544.1 | | | 530.8 | | | 13.3 | | | 3 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 37.7 | | | 42.2 | | | (4.5) | | | (11) | |
| Interconnect, inbound roaming, equipment sales and other | 5.8 | | | 5.6 | | | 0.2 | | | 4 | |
| Total residential mobile revenue | 43.5 | | | 47.8 | | | (4.3) | | | (9) | |
| Total residential revenue | 587.6 | | | 578.6 | | | 9.0 | | | 2 | |
| | | | | | | |
| B2B service revenue | 25.1 | | | 22.7 | | | 2.4 | | | 11 | |
| Total | $ | 612.7 | | | $ | 601.3 | | | $ | 11.4 | | | 2 | |
The details of the changes in VTR’s revenue during the three and nine months ended September 30, 2021,March 31, 2022, as compared to the corresponding periodsperiod in 2020,2021, are set forth below (in millions):
| | | | | | | | | | | |
| Three-month comparison | | Nine-month comparison |
Decrease in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | $ | (5.0) | | | $ | (17.8) | |
| ARPU (b) | (3.3) | | | (9.5) | |
| Decrease in residential fixed non-subscription revenue (c) | (0.4) | | | (3.3) | |
| Total decrease in residential fixed revenue | (8.7) | | | (30.6) | |
Decrease in residential mobile service revenue (d) | (2.4) | | | (7.6) | |
| Decrease in residential mobile interconnect, inbound roaming, equipment sales and other revenue | (0.2) | | | (0.2) | |
Increase in B2B service revenue | 0.6 | | | 0.2 | |
| Total organic decrease | (10.7) | | | (38.2) | |
| Impact of FX | 2.0 | | | 49.6 | |
| Total | $ | (8.7) | | | $ | 11.4 | |
| | | | | | | |
| | | |
Decreasein residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | | | $ | (4.0) | |
| ARPU (b) | | | (12.1) | |
| Change in residential fixed non-subscription revenue | | | — | |
| Total decrease in residential fixed revenue | | | (16.1) | |
Decreasein residential mobile service revenue (c) | | | (2.9) | |
| Decrease in residential mobile interconnect, inbound roaming, equipment sales and other revenue | | | (1.0) | |
Increasein B2B service revenue | | | 0.4 | |
Total organicdecrease | | | (19.6) | |
| Impact of FX | | | (19.9) | |
| Total | | | $ | (39.5) | |
(a)The decreases aredecrease is primarily attributable to lower average broadband internet and video RGUs.
(b)The decreases aredecrease is primarily due to lower ARPU from broadband internet services, mainly associated with (i) increased competition that generally resulted in (a) the churn of higher-ARPU customers and (b) the addition of lower-ARPU customers, and (ii) strategic initiatives implemented during the first quarter of 2022. Higher discounts and lower premium subscribers related to video services also contributed to the decline in ARPU.
(c)Thedecrease is due to (i) lower ARPU from broadband internet services, partially the result of continued high levels of competition, (ii) higher ARPU from telephonymobile services and (iii) higher ARPU from video services, which is due in part to live soccer matches being broadcast on our premium programming that were cancelled during 2020.
(c)The decreases are primarily due to lower volumes of interconnect revenue. In addition, during the nine-month comparison, the decrease is attributable to lower installations.
(d)The decreases are due to lower ARPU from mobile services and(ii) lower average numbers of mobile subscribers.
Costa Rica. Costa Rica’s revenue by major category is set forth below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Increase (decrease) |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 18.4 | | | $ | 19.7 | | | $ | (1.3) | | | (7) | |
| Broadband internet | 15.4 | | | 13.0 | | | 2.4 | | | 18 | |
| Fixed-line telephony | 1.1 | | | 1.0 | | | 0.1 | | | 10 | |
| Total subscription revenue | 34.9 | | | 33.7 | | | 1.2 | | | 4 | |
| Non-subscription revenue | 1.5 | | | 1.4 | | | 0.1 | | | 7 | |
| Total residential fixed revenue | 36.4 | | | 35.1 | | | 1.3 | | | 4 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 27.6 | | | — | | | 27.6 | | | N.M. |
| Interconnect, inbound roaming, equipment sales and other | 7.0 | | | — | | | 7.0 | | | N.M. |
| Total residential mobile revenue | 34.6 | | | — | | | 34.6 | | | N.M. |
| Total residential revenue | 71.0 | | | 35.1 | | | 35.9 | | | 102 | |
| | | | | | | |
| B2B service revenue | 5.9 | | | — | | | 5.9 | | | N.M. |
| Total | $ | 76.9 | | | $ | 35.1 | | | $ | 41.8 | | | 119 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, | | Increase (decrease) |
| | 2021 | | 2020 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 56.9 | | | $ | 59.6 | | | $ | (2.7) | | | (5) | |
| Broadband internet | 43.9 | | | 38.0 | | | 5.9 | | | 16 | |
| Fixed-line telephony | 3.3 | | | 2.6 | | | 0.7 | | | 27 | |
| Total subscription revenue | 104.1 | | | 100.2 | | | 3.9 | | | 4 | |
| Non-subscription revenue | 4.8 | | | 3.2 | | | 1.6 | | | 50 | |
| Total residential fixed revenue | 108.9 | | | 103.4 | | | 5.5 | | | 5 | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 27.6 | | | — | | | 27.6 | | | N.M. |
| Interconnect, inbound roaming, equipment sales and other | 7.0 | | | — | | | 7.0 | | | N.M. |
| Total residential mobile revenue | 34.6 | | | — | | | 34.6 | | | N.M. |
| Total residential revenue | 143.5 | | | 103.4 | | | 40.1 | | | 39 | |
| | | | | | | |
| B2B service revenue | 5.9 | | | — | | | 5.9 | | | N.M. |
| Total | $ | 149.4 | | | $ | 103.4 | | | $ | 46.0 | | | 44 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Increase (decrease) |
| | 2022 | | 2021 | | $ | | % |
| | in millions, except percentages |
| Residential revenue: | | | | | | | |
| Residential fixed revenue: | | | | | | | |
| Subscription revenue: | | | | | | | |
| Video | $ | 17.3 | | | $ | 19.5 | | | $ | (2.2) | | | (11) | |
| Broadband internet | 16.3 | | | 14.0 | | | 2.3 | | | 16 | |
| Fixed-line telephony | 1.1 | | | 1.1 | | | — | | | — | |
| Total subscription revenue | 34.7 | | | 34.6 | | | 0.1 | | | — | |
| Non-subscription revenue | 0.8 | | | 1.6 | | | (0.8) | | | (50) | |
| Total residential fixed revenue | 35.5 | | | 36.2 | | | (0.7) | | | (2) | |
| Residential mobile revenue: | | | | | | | |
| Service revenue | 46.2 | | | — | | | 46.2 | | | N.M. |
| Interconnect, inbound roaming, equipment sales and other (a) | 16.5 | | | — | | | 16.5 | | | N.M. |
| Total residential mobile revenue | 62.7 | | | — | | | 62.7 | | | N.M. |
| Total residential revenue | 98.2 | | | 36.2 | | | 62.0 | | | 171 | |
| | | | | | | |
| B2B service revenue | 9.2 | | | — | | | 9.2 | | | N.M. |
| | | | | | | |
| Total | $ | 107.4 | | | $ | 36.2 | | | $ | 71.2 | | | 197 | |
N.M. — Not Meaningful.
The details of the changes in Costa Rica’s revenue during three and nine months ended September 30, 2021,March 31, 2022, as compared to the corresponding periodsperiod in 2020,2021, are set forth below (in millions):
| | | | | | | | | | | |
| Three-month comparison | | Nine-month comparison |
Increase in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | $ | 1.8 | | | $ | 5.1 | |
| ARPU (b) | 0.8 | | | 5.4 | |
Increase in residential fixed non-subscription revenue | 0.3 | | | 2.0 | |
| | | |
| | | |
| | | |
| | | |
| Total organic increase | 2.9 | | | 12.5 | |
| Impact of an acquisition | 40.6 | | | 40.6 | |
| Impact of FX | (1.7) | | | (7.1) | |
| Total | $ | 41.8 | | | $ | 46.0 | |
| | | | | | | |
| | | |
Increase(decrease) in residential fixed subscription revenue due to change in: | | | |
| Average number of RGUs (a) | | | $ | 3.5 | |
| ARPU (b) | | | (1.7) | |
Decreasein residential fixed non-subscription revenue | | | (0.8) | |
| | | |
| | | |
| | | |
| | | |
| Total organic increase | | | 1.0 | |
| Impact of an acquisition | | | 72.0 | |
| Impact of FX | | | (1.8) | |
| Total | | | $ | 71.2 | |
(a)The increasesareincrease is primarilyattributable to higher average broadband internet RGUs.
(b)The increases aredecrease is primarily due to higherlower ARPU from video services and the impact of product mix, partially offset by an increase in ARPU from broadband internet.internet services.
Programming and other direct costs of services
Programming and other direct costs of services include programming and copyright costs, interconnect and access costs, equipment costs, which primarily relate to costs of mobile handsets and other devices, and other direct costs related to our operations. Programming and copyright costs, which represent a significant portion of our operating costs, may increase in future periods as a result of (i) higher costs associated with the expansion of our digital video content, including rights associated with ancillary product offerings and rights that provide for the broadcast of live sporting events, (ii) rate increases or (iii) growth in the number of our video subscribers.
Consolidated. The following tables settable sets forth the organic and non-organic changes in programming and other direct costs of services on a consolidated basis for the periods indicated.basis.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Three months ended September 30, | | Increase | | FX | | Acquisitions (disposition), net | | Organic |
| | 2021 | | 2020 | | | | |
| | in millions |
| | | | | | | | | | | |
| Programming and copyright | $ | 108.5 | | | $ | 96.0 | | | $ | 12.5 | | | $ | (0.3) | | | $ | 3.3 | | | $ | 9.5 | |
| Interconnect | 69.7 | | | 58.2 | | | 11.5 | | | (1.2) | | | 12.2 | | | 0.5 | |
| Equipment and other | 112.8 | | | 35.5 | | | 77.3 | | | (0.4) | | | 69.1 | | | 8.6 | |
| Total programming and other direct costs of services | $ | 291.0 | | | $ | 189.7 | | | $ | 101.3 | | | $ | (1.9) | | | $ | 84.6 | | | $ | 18.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Nine months ended September 30, | | Increase | | FX | | Acquisitions (disposition), net | | Organic |
| | 2021 | | 2020 | | | | |
| | in millions |
| | | | | | | | | | | |
| Programming and copyright | $ | 334.7 | | | $ | 289.5 | | | $ | 45.2 | | | $ | 8.9 | | | $ | 9.7 | | | $ | 26.6 | |
| Interconnect | 201.9 | | | 183.3 | | | 18.6 | | | (2.3) | | | 29.9 | | | (9.0) | |
| Equipment and other | 310.3 | | | 107.4 | | | 202.9 | | | (0.2) | | | 188.3 | | | 14.8 | |
| Total programming and other direct costs of services | $ | 846.9 | | | $ | 580.2 | | | $ | 266.7 | | | $ | 6.4 | | | $ | 227.9 | | | $ | 32.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Increase (decrease) | | Increase (decrease) from: |
| | 2022 | | 2021 | | | FX | | Acquisitions | | Organic |
| | in millions |
| | | | | | | | | | | |
| Programming and copyright | $ | 109.3 | | | $ | 111.8 | | | $ | (2.5) | | | $ | (6.1) | | | $ | — | | | $ | 3.6 | |
| Interconnect | 85.7 | | | 80.6 | | | 5.1 | | | (2.3) | | | 7.2 | | | 0.2 | |
| Equipment and other | 107.2 | | | 91.3 | | | 15.9 | | | (0.5) | | | 9.4 | | | 7.0 | |
| Total programming and other direct costs of services | $ | 302.2 | | | $ | 283.7 | | | $ | 18.5 | | | $ | (8.9) | | | $ | 16.6 | | | $ | 10.8 | |
C&W Caribbean and Networks. The following tables settable sets forth the organic and non-organic changes in programming and other direct costs of services for our C&W Caribbean and Networks segment for the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Three months ended September 30, | | Increase (decrease) | | FX | | An acquisition | | Organic |
| | 2021 | | 2020 | | | | |
| | in millions |
| | | | | | | | | | | |
| Programming and copyright | $ | 22.4 | | | $ | 22.9 | | | $ | (0.5) | | | $ | (0.3) | | | $ | — | | | $ | (0.2) | |
| Interconnect | 39.2 | | | 38.2 | | | 1.0 | | | (1.1) | | | — | | | 2.1 | |
| Equipment and other | 18.0 | | | 14.9 | | | 3.1 | | | (0.2) | | | — | | | 3.3 | |
| Total programming and other direct costs of services | $ | 79.6 | | | $ | 76.0 | | | $ | 3.6 | | | $ | (1.6) | | | $ | — | | | $ | 5.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Nine months ended September 30, | | Increase (decrease) | | FX | | An acquisition | | Organic |
| | 2021 | | 2020 | | | | |
| | in millions |
| | | | | | | | | | | |
| Programming and copyright | $ | 69.3 | | | $ | 69.6 | | | $ | (0.3) | | | $ | (1.1) | | | $ | — | | | $ | 0.8 | |
| Interconnect | 114.4 | | | 121.3 | | | (6.9) | | | (4.1) | | | — | | | (2.8) | |
| Equipment and other | 51.0 | | | 44.2 | | | 6.8 | | | (0.6) | | | 1.8 | | | 5.6 | |
| Total programming and other direct costs of services | $ | 234.7 | | | $ | 235.1 | | | $ | (0.4) | | | $ | (5.8) | | | $ | 1.8 | | | $ | 3.6 | |
•Interconnect: The organic increase during the three-month comparison is primarily due to higher wholesale call volumes. The organic decrease during the nine-month comparison is primarily due to the aforementioned increase in wholesale call volumes, which was more than offset by individually insignificant decreases. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Increase (decrease) | | Increase (decrease) from: |
| | 2022 | | 2021 | | | FX | | Organic |
| | in millions |
| | | | | | | | | |
| Programming and copyright | $ | 23.1 | | | $ | 23.7 | | | $ | (0.6) | | | $ | (0.4) | | | $ | (0.2) | |
| Interconnect | 37.6 | | | 37.6 | | | — | | | (1.3) | | | 1.3 | |
| Equipment and other | 20.4 | | | 16.6 | | | 3.8 | | | (0.4) | | | 4.2 | |
| Total programming and other direct costs of services | $ | 81.1 | | | $ | 77.9 | | | $ | 3.2 | | | $ | (2.1) | | | $ | 5.3 | |
•Equipment and other: The organic increases areincrease is primarily due to higher volumes of equipment sales, in part driven by the easing of COVID-19 related restrictions incosts associated with certain of our markets.
C&W Panama. The following tables settable sets forth the organic changes in programming and other direct costs of services for our C&W Panama segment for the periods indicated.segment.
| | | | Three months ended September 30, | | Organic increase (decrease) | | Three months ended March 31, | | Organic Increase |
| | | 2021 | | 2020 | | | 2022 | | 2021 | |
| | | in millions | | in millions |
| | Programming and copyright | Programming and copyright | $ | 3.7 | | | $ | 3.2 | | | $ | 0.5 | | Programming and copyright | $ | 4.0 | | | $ | 3.7 | | | $ | 0.3 | |
| Interconnect | Interconnect | 9.6 | | | 10.6 | | | (1.0) | | Interconnect | 15.2 | | | 15.2 | | | — | |
| Equipment and other | Equipment and other | 23.1 | | | 17.1 | | | 6.0 | | Equipment and other | 17.6 | | | 17.6 | | | — | |
| Total programming and other direct costs of services | Total programming and other direct costs of services | $ | 36.4 | | | $ | 30.9 | | | $ | 5.5 | | Total programming and other direct costs of services | $ | 36.8 | | | $ | 36.5 | | | $ | 0.3 | |
| | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, | | Organic increase (decrease) |
| | 2021 | | 2020 | |
| | in millions |
| | | | | |
| Programming and copyright | $ | 11.3 | | | $ | 11.2 | | | $ | 0.1 | |
| Interconnect | 29.8 | | | 30.9 | | | (1.1) | |
| Equipment and other | 63.1 | | | 53.0 | | | 10.1 | |
| Total programming and other direct costs of services | $ | 104.2 | | | $ | 95.1 | | | $ | 9.1 | |
•Equipment and other: The organic increases are primarily due to (i) higher volumes of mobile handset sales, mainly due to the easing of COVID-19 related restrictions, and (ii) increases driven by certain nonrecurring government-related projects, some of which were put on hold during 2020 due to the impact of COVID-19.
Liberty Puerto Rico. The following tables settable sets forth the organic and non-organic changes in programming and other direct costs of services for our Liberty Puerto Rico segment for the periods indicated.segment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Three months ended September 30, | | Increase | | Acquisition (disposition), net | | Organic |
| | 2021 | | 2020 | | | |
| | in millions |
| | | | | | | | | |
| Programming and copyright | $ | 27.2 | | | $ | 22.1 | | | $ | 5.1 | | | $ | 3.3 | | | $ | 1.8 | |
| Interconnect | 11.1 | | | 2.0 | | | 9.1 | | | 8.6 | | | 0.5 | |
| Equipment and other | 63.7 | | | 0.3 | | | 63.4 | | | 63.6 | | | (0.2) | |
| Total programming and other direct costs of services | $ | 102.0 | | | $ | 24.4 | | | $ | 77.6 | | | $ | 75.5 | | | $ | 2.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Nine months ended September 30, | | Increase | | Acquisition (disposition), net | | Organic |
| | 2021 | | 2020 | | | |
| | in millions |
| | | | | | | | | |
| Programming and copyright | $ | 82.2 | | | $ | 67.6 | | | $ | 14.6 | | | $ | 9.7 | | | $ | 4.9 | |
| Interconnect | 34.3 | | | 6.3 | | | 28.0 | | | 26.3 | | | 1.7 | |
| Equipment and other | 181.2 | | | 0.4 | | | 180.8 | | | 181.0 | | | (0.2) | |
| Total programming and other direct costs of services | $ | 297.7 | | | $ | 74.3 | | | $ | 223.4 | | | $ | 217.0 | | | $ | 6.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Three months ended March 31, | | Increase (decrease) | | An acquisition | | Organic |
| | 2022 | | 2021 | | | |
| | in millions |
| | | | | | | | | |
| Programming and copyright | $ | 27.6 | | | $ | 27.2 | | | $ | 0.4 | | | $ | — | | | $ | 0.4 | |
| Interconnect | 19.4 | | | 20.6 | | | (1.2) | | | 0.6 | | | (1.8) | |
| Equipment and other | 59.3 | | | 52.8 | | | 6.5 | | | 0.2 | | | 6.3 | |
| Total programming and other direct costs of services | $ | 106.3 | | | $ | 100.6 | | | $ | 5.7 | | | $ | 0.8 | | | $ | 4.9 | |
•Programming and copyright:Interconnect: The organic increases aredecrease is primarily attributabledue to higher programming rates and higher average video subscribers.lower roaming costs, mainly due to lower volumes.
VTR. The following tables settable sets forth the organic and non-organic changes in programming and other direct costs of services for our VTR segment for the periods indicated.segment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Increase (decrease) | | Increase (decrease) from: |
| | 2021 | | 2020 | | | FX | | Organic |
| | in millions |
| | | | | | | | | |
| Programming and copyright | $ | 46.1 | | | $ | 39.9 | | | $ | 6.2 | | | $ | 0.5 | | | $ | 5.7 | |
| Interconnect | 8.4 | | | 9.4 | | | (1.0) | | | — | | | (1.0) | |
| Equipment and other | 2.5 | | | 3.4 | | | (0.9) | | | 0.1 | | | (1.0) | |
| Total programming and other direct costs of services | $ | 57.0 | | | $ | 52.7 | | | $ | 4.3 | | | $ | 0.6 | | | $ | 3.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, | | Increase (decrease) | | Increase (decrease) from: |
| | 2021 | | 2020 | | | FX | | Organic |
| | in millions |
| | | | | | | | | |
| Programming and copyright | $ | 145.0 | | | $ | 117.6 | | | $ | 27.4 | | | $ | 11.8 | | | $ | 15.6 | |
| Interconnect | 26.1 | | | 30.7 | | | (4.6) | | | 2.1 | | | (6.7) | |
| Equipment and other | 9.0 | | | 11.1 | | | (2.1) | | | 0.8 | | | (2.9) | |
| Total programming and other direct costs of services | $ | 180.1 | | | $ | 159.4 | | | $ | 20.7 | | | $ | 14.7 | | | $ | 6.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Decrease | | Increase (decrease) from: |
| | 2022 | | 2021 | | | FX | | Organic |
| | in millions |
| | | | | | | | | |
| Programming and copyright | $ | 45.7 | | | $ | 48.4 | | | $ | (2.7) | | | $ | (5.3) | | | $ | 2.6 | |
| Interconnect | 7.7 | | | 7.8 | | | (0.1) | | | (0.9) | | | 0.8 | |
| Equipment and other | 1.1 | | | 4.0 | | | (2.9) | | | (0.1) | | | (2.8) | |
| Total programming and other direct costs of services | $ | 54.5 | | | $ | 60.2 | | | $ | (5.7) | | | $ | (6.3) | | | $ | 0.6 | |
•Programming and copyright: The organic increases areincrease is primarily due to higher premium and(i) basic content costs. During 2020, programming costs, were lower due to the renegotiation ofin part from higher rates, and (ii) a settlement associated with a programming contract governing rates for live soccer matches, which were cancelled as a result of COVID-19.In addition, the three and nine-month comparisons each include a decrease of $1 million related to the foreign currency impact of programming contracts denominated in U.S. dollars.
•Interconnect: The organic decreases areincrease is primarily due to the net effect of (i) lower interconnect rates and volumes,higher national leased capacity and (ii) for the nine-month comparison, a decrease inlower MVNO charges of $1 million, as we renegotiated our contract during the second quarter of 2021.charges.
•Equipment and other: The organic decreases aredecrease is primarily due to lower volumes of handset sales, and for the nine-month comparison, the net effect of (i) higher handset prices and (ii) decreases associated with the foreign currency impact of handset contracts denominated in U.S. dollars.
Costa Rica. The following tables settable sets forth the organic and non-organic changes in programming and other direct costs of services for our Costa Rica segment for the periods indicated.segment.
| | | | | Increase (decrease) from: | | | | Increase (decrease) from: |
| | Three months ended September 30, | | | An acquisition | | | Three months ended March 31, | | | An acquisition | |
| | | 2021 | | 2020 | | Increase | | FX | | Organic | | 2022 | | 2021 | | Increase | | FX | | Organic |
| | | in millions | | in millions |
| | Programming and copyright | Programming and copyright | $ | 9.1 | | | $ | 7.9 | | | $ | 1.2 | | | $ | (0.5) | | | $ | — | | | $ | 1.7 | | Programming and copyright | $ | 8.9 | | | $ | 8.8 | | | $ | 0.1 | | | $ | (0.4) | | | $ | — | | | $ | 0.5 | |
| Interconnect | Interconnect | 5.0 | | | 1.5 | | | 3.5 | | | (0.2) | | | 3.6 | | | 0.1 | | Interconnect | 7.2 | | | 0.6 | | | 6.6 | | | (0.1) | | | 6.6 | | | 0.1 | |
| Equipment and other | Equipment and other | 6.2 | | | 0.4 | | | 5.8 | | | (0.3) | | | 5.5 | | | 0.6 | | Equipment and other | 9.3 | | | 0.8 | | | 8.5 | | | — | | | 9.2 | | | (0.7) | |
| Total programming and other direct costs of services | Total programming and other direct costs of services | $ | 20.3 | | | $ | 9.8 | | | $ | 10.5 | | | $ | (1.0) | | | $ | 9.1 | | | $ | 2.4 | | Total programming and other direct costs of services | $ | 25.4 | | | $ | 10.2 | | | $ | 15.2 | | | $ | (0.5) | | | $ | 15.8 | | | $ | (0.1) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Increase (decrease) from: |
| Nine months ended September 30, | | | | | | An acquisition | | |
| | 2021 | | 2020 | | Increase | | FX | | | Organic |
| | in millions |
| | | | | | | | | | | |
| Programming and copyright | $ | 26.9 | | | $ | 23.5 | | | $ | 3.4 | | | $ | (1.8) | | | $ | — | | | $ | 5.2 | |
| Interconnect | 8.0 | | | 4.3 | | | 3.7 | | | (0.4) | | | 3.6 | | | 0.5 | |
| Equipment and other | 7.7 | | | 0.6 | | | 7.1 | | | (0.4) | | | 5.5 | | | 2.0 | |
| Total programming and other direct costs of services | $ | 42.6 | | | $ | 28.4 | | | $ | 14.2 | | | $ | (2.6) | | | $ | 9.1 | | | $ | 7.7 | |
•Programming and copyright: The organic increases are primarily due to increases in certain premium content costs.
•Equipment and other: The organic increases are primarily due to higher volumes of equipment sales.
Other operating costs and expenses
Other operating costs and expenses set forth in the tables below comprise the following cost categories:
•Personnel and contract labor-related costs, which primarily include salary-related and cash bonus expenses, net of capitalizable labor costs, and temporary contract labor costs;
•Network-related expenses, which primarily include costs related to network access, system power, core network, and CPE repair, maintenance and test costs;
•Service-related costs, which primarily include professional services, information technology-related services, audit, legal and other services;
•Commercial, which primarily includes sales and marketing costs, such as advertising, commissions and other sales and marketing-related costs, and customer care costs related to outsourced call centers;
•Facility, provision, franchise and other, which primarily includes facility-related costs, provision for bad debt expense, franchise-related fees, bank fees, insurance, vehicle-related, travel and entertainment and other operating-related costs; and
•Share-based compensation expense that relates to (i) equity awards issued to our employees and Directors and (ii) certain bonus-related expenses that will beare paid in the form of equity.
Consolidated. The following tables settable sets forth the organic and non-organic changes in other operating costs and expenses on a consolidated basis for the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Three months ended September 30, | | Increase | | | | Acquisitions (disposition), net | | Organic |
| | 2021 | | 2020 | | | FX | | |
| | in millions |
| | | | | | | | | | | |
| Personnel and contract labor | $ | 142.9 | | | $ | 113.9 | | | $ | 29.0 | | | $ | (1.0) | | | $ | 24.7 | | | $ | 5.3 | |
| Network-related | 85.0 | | | 66.4 | | | 18.6 | | | (0.5) | | | 12.8 | | | 6.3 | |
| Service-related | 47.4 | | | 35.2 | | | 12.2 | | | — | | | 8.6 | | | 3.6 | |
| Commercial | 57.4 | | | 38.8 | | | 18.6 | | | (0.5) | | | 13.3 | | | 5.8 | |
| Facility, provision, franchise and other | 122.2 | | | 83.3 | | | 38.9 | | | (0.7) | | | 38.9 | | | 0.7 | |
| Share-based compensation expense | 33.1 | | | 28.0 | | | 5.1 | | | (0.1) | | | — | | | 5.2 | |
| Total other operating costs and expenses | $ | 488.0 | | | $ | 365.6 | | | $ | 122.4 | | | $ | (2.8) | | | $ | 98.3 | | | $ | 26.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Nine months ended September 30, | | Increase | | | | Acquisitions (disposition), net | | Organic |
| | 2021 | | 2020 | | | FX | | |
| | in millions |
| | | | | | | | | | | |
| Personnel and contract labor | $ | 425.1 | | | $ | 351.6 | | | $ | 73.5 | | | $ | 0.8 | | | $ | 68.0 | | | $ | 4.7 | |
| Network-related | 242.8 | | | 193.2 | | | 49.6 | | | 2.8 | | | 31.6 | | | 15.2 | |
| Service-related | 140.2 | | | 110.0 | | | 30.2 | | | 1.8 | | | 23.2 | | | 5.2 | |
| Commercial | 163.5 | | | 120.3 | | | 43.2 | | | 3.7 | | | 28.1 | | | 11.4 | |
| Facility, provision, franchise and other | 342.0 | | | 255.4 | | | 86.6 | | | 0.3 | | | 95.7 | | | (9.4) | |
| Share-based compensation expense | 88.9 | | | 75.3 | | | 13.6 | | | 0.2 | | | 0.9 | | | 12.5 | |
| Total other operating costs and expenses | $ | 1,402.5 | | | $ | 1,105.8 | | | $ | 296.7 | | | $ | 9.6 | | | $ | 247.5 | | | $ | 39.6 | |
For additional information regarding our share-based compensation, see Results of Operations (below Adjusted OIBDA) discussion and analysis below.basis.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Increase | | Increase (decrease) from: |
| | 2022 | | 2021 | | | FX | | Acquisitions | | Organic |
| | in millions |
| | | | | | | | | | | |
| Personnel and contract labor | $ | 153.2 | | | $ | 138.4 | | | $ | 14.8 | | | $ | (2.8) | | | $ | 4.3 | | | $ | 13.3 | |
| Network-related | 82.6 | | | 79.0 | | | 3.6 | | | (3.1) | | | 5.7 | | | 1.0 | |
| Service-related | 51.2 | | | 47.5 | | | 3.7 | | | (1.0) | | | 5.0 | | | (0.3) | |
| Commercial | 65.5 | | | 52.4 | | | 13.1 | | | (2.8) | | | 11.6 | | | 4.3 | |
| Facility, provision, franchise and other | 123.8 | | | 114.9 | | | 8.9 | | | (1.6) | | | 13.8 | | | (3.3) | |
| Share-based compensation expense | 30.0 | | | 23.0 | | | 7.0 | | | (0.4) | | | 0.6 | | | 6.8 | |
| Total other operating costs and expenses | $ | 506.3 | | | $ | 455.2 | | | $ | 51.1 | | | $ | (11.7) | | | $ | 41.0 | | | $ | 21.8 | |
C&W Caribbean and Networks. The following tables settable sets forth the organic and non-organic changes in other operating costs and expenses for our C&W Caribbean and Networks segment for the periods indicated.segment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Three months ended September 30, | | Increase (decrease) | | | | An acquisition | | Organic |
| | 2021 | | 2020 | | | FX | | |
| | in millions |
| | | | | | | | | | | |
| Personnel and contract labor | $ | 60.9 | | | $ | 60.8 | | | $ | 0.1 | | | $ | (0.7) | | | $ | — | | | $ | 0.8 | |
| Network-related | 40.9 | | | 34.9 | | | 6.0 | | | (0.5) | | | — | | | 6.5 | |
| Service-related | 16.4 | | | 16.3 | | | 0.1 | | | (0.1) | | | — | | | 0.2 | |
| Commercial | 12.6 | | | 10.0 | | | 2.6 | | | (0.2) | | | — | | | 2.8 | |
| Facility, provision, franchise and other | 42.3 | | | 46.4 | | | (4.1) | | | (0.4) | | | — | | | (3.7) | |
| Share-based compensation expense | 10.8 | | | 7.4 | | | 3.4 | | | 0.1 | | | — | | | 3.3 | |
| Total other operating costs and expenses | $ | 183.9 | | | $ | 175.8 | | | $ | 8.1 | | | $ | (1.8) | | | $ | — | | | $ | 9.9 | |
| | | Increase (decrease) from: | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine months ended September 30, | | Increase (decrease) | | | An acquisition | | Organic | | Three months ended March 31, | | Increase (decrease) | | Increase (decrease) from: |
| | | 2021 | | 2020 | | FX | | | 2022 | | 2021 | | FX | | Organic |
| | | in millions | | in millions |
| | Personnel and contract labor | Personnel and contract labor | $ | 187.3 | | | $ | 191.1 | | | $ | (3.8) | | | $ | (2.0) | | | $ | 1.3 | | | $ | (3.1) | | Personnel and contract labor | $ | 63.6 | | | $ | 64.3 | | | $ | (0.7) | | | $ | (1.1) | | | $ | 0.4 | |
| Network-related | Network-related | 116.1 | | | 104.6 | | | 11.5 | | | (1.6) | | | — | | | 13.1 | | Network-related | 38.8 | | | 37.8 | | | 1.0 | | | (0.7) | | | 1.7 | |
| Service-related | Service-related | 51.8 | | | 52.2 | | | (0.4) | | | (0.3) | | | 0.1 | | | (0.2) | | Service-related | 18.4 | | | 17.7 | | | 0.7 | | | (0.1) | | | 0.8 | |
| Commercial | Commercial | 36.2 | | | 33.7 | | | 2.5 | | | (1.0) | | | — | | | 3.5 | | Commercial | 11.2 | | | 11.2 | | | — | | | (0.3) | | | 0.3 | |
| Facility, provision, franchise and other | Facility, provision, franchise and other | 121.2 | | | 130.9 | | | (9.7) | | | (1.1) | | | — | | | (8.6) | | Facility, provision, franchise and other | 39.3 | | | 39.6 | | | (0.3) | | | (0.5) | | | 0.2 | |
| Share-based compensation expense | Share-based compensation expense | 25.9 | | | 21.2 | | | 4.7 | | | — | | | 0.9 | | | 3.8 | | Share-based compensation expense | 7.2 | | | 6.2 | | | 1.0 | | | — | | | 1.0 | |
| Total other operating costs and expenses | Total other operating costs and expenses | $ | 538.5 | | | $ | 533.7 | | | $ | 4.8 | | | $ | (6.0) | | | $ | 2.3 | | | $ | 8.5 | | Total other operating costs and expenses | $ | 178.5 | | | $ | 176.8 | | | $ | 1.7 | | | $ | (2.7) | | | $ | 4.4 | |
•Personnel and contract labor: The organic decrease for the nine-month comparisonincrease is primarily due to lower salaries and other personnelhigher contract labor costs, mainly associated with the benefit of certain restructuring activities.
•Network-related: The organic increases areincrease is primarily due to higher subsea cable repairs, maintenance and utilities costs.
•Commercial:Service-related: The organic increases areincrease is primarily due to higher marketingcharges allocated from our Corporate operations, partially offset by lower audit, legal and sales costs, as promotional activities were reduced in the prior year period due to certain adverse economic impacts caused by COVID-19.consultancy fees.
•Facility, provision, franchise and other costs: other:The organic decreases areincrease is primarily due to the net impact of (i) lower bad debt provisions, as the impacts of COVID-19 resulted in higher bad debt expense in the prior year due to (a) delays in collections, (b) higher expected credit lossescosts associated with certain B2B customersthe addition of new cell sites, (ii) higher utility charges and (c) changes in our general expectations(iii) the positive impact of an accrual release during the first quarter of 2022 related to our customers’ ability to pay, (ii) individually insignificant decreases and (iii) during the nine-month comparison, lower travel and entertainment costs due to the continued curtailment of such costs as a result of the impact of COVID-19.
C&W Panama. The following tables settable sets forth the organic changes in other operating costs and expenses for our C&W Panama segment for the periods indicated.segment.
| | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Organic increase (decrease) |
| | 2021 | | 2020 | |
| | in millions |
| | | | | |
| Personnel and contract labor | $ | 16.8 | | | $ | 17.8 | | | $ | (1.0) | |
| Network-related | 9.6 | | | 9.6 | | | — | |
| Service-related | 3.7 | | | 2.6 | | | 1.1 | |
| Commercial | 4.7 | | | 5.3 | | | (0.6) | |
| Facility, provision, franchise and other | 9.8 | | | 9.6 | | | 0.2 | |
| Share-based compensation expense | 1.0 | | | 0.7 | | | 0.3 | |
| Total other operating costs and expenses | $ | 45.6 | | | $ | 45.6 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, | | Organic increase (decrease) | | | | |
| | 2021 | | 2020 | | | |
| | in millions |
| | | | | | | | | |
| Personnel and contract labor | $ | 50.9 | | | $ | 52.7 | | | $ | (1.8) | | | | | |
| Network-related | 29.6 | | | 30.6 | | | (1.0) | | | | | |
| Service-related | 11.4 | | | 10.2 | | | 1.2 | | | | | |
| Commercial | 14.8 | | | 15.9 | | | (1.1) | | | | | |
| Facility, provision, franchise and other | 30.6 | | | 39.1 | | | (8.5) | | | | | |
| Share-based compensation expense | 2.6 | | | 2.2 | | | 0.4 | | | | | |
| Total other operating costs and expenses | $ | 139.9 | | | $ | 150.7 | | | $ | (10.8) | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, | | Organic increase (decrease) | | | | |
| | 2022 | | 2021 | | | |
| | in millions |
| | | | | | | | | |
| Personnel and contract labor | $ | 18.9 | | | $ | 17.2 | | | $ | 1.7 | | | | | |
| Network-related | 9.9 | | | 9.8 | | | 0.1 | | | | | |
| Service-related | 4.6 | | | 3.9 | | | 0.7 | | | | | |
| Commercial | 5.9 | | | 5.1 | | | 0.8 | | | | | |
| Facility, provision, franchise and other | 10.6 | | | 10.8 | | | (0.2) | | | | | |
| Share-based compensation expense | 1.3 | | | 0.7 | | | 0.6 | | | | | |
| Total other operating costs and expenses | $ | 51.2 | | | $ | 47.5 | | | $ | 3.7 | | | | | |
•Personnel and contract labor: The organic decreases are primarily due to lower salaries and other personnel costs, mainly associated with the benefit of certain restructuring activities.
•Facility, provision, franchise and other costs: The organic decrease for the nine-month comparisonincrease is primarily due to lower bad debt provisions, largely duehigher staff costs related to COVID-19 related impacts in the 2020 periods.increased sales activities.
Liberty Puerto Rico. The following tables settable sets forth the organic and non-organic changes in other operating costs and expenses for our Liberty Puerto Rico segment for the periods indicated.segment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (decrease) from: |
| | Three months ended September 30, | | Increase | | Acquisition (disposition), net | | Organic |
| | 2021 | | 2020 | | | |
| | in millions |
| | | | | | | | | |
| Personnel and contract labor | $ | 36.8 | | | $ | 11.7 | | | $ | 25.1 | | | $ | 22.5 | | | $ | 2.6 | |
| Network-related | 11.8 | | | 1.0 | | | 10.8 | | | 10.5 | | | 0.3 | |
| Service-related | 10.3 | | | 4.5 | | | 5.8 | | | 6.9 | | | (1.1) | |
| Commercial | 11.8 | | | 3.6 | | | 8.2 | | | 7.4 | | | 0.8 | |
| Facility, provision, franchise and other | 44.1 | | | 11.1 | | | 33.0 | | | 30.4 | | | 2.6 | |
| Share-based compensation expense | 1.7 | | | 1.1 | | | 0.6 | | | — | | | 0.6 | |
| Total other operating costs and expenses | $ | 116.5 | | | $ | 33.0 | | | $ | 83.5 | | | $ | 77.7 | | | $ | 5.8 | |
| | | Increase (decrease) from: | | Increase (decrease) from: |
| | | Nine months ended September 30, | | Increase | | Acquisition (disposition), net | | Organic | | Three months ended March 31, | | Increase (decrease) | | An acquisition | | Organic |
| | | 2021 | | 2020 | | | 2022 | | 2021 | |
| | | in millions | | in millions |
| | Personnel and contract labor | Personnel and contract labor | $ | 104.4 | | | $ | 34.5 | | | $ | 69.9 | | | $ | 64.5 | | | $ | 5.4 | | Personnel and contract labor | $ | 40.6 | | | $ | 32.4 | | | $ | 8.2 | | | $ | 0.5 | | | $ | 7.7 | |
| Network-related | Network-related | 32.5 | | | 3.2 | | | 29.3 | | | 29.3 | | | — | | Network-related | 10.9 | | | 10.8 | | | 0.1 | | | 0.1 | | | — | |
| Service-related | Service-related | 30.1 | | | 11.3 | | | 18.8 | | | 21.4 | | | (2.6) | | Service-related | 11.5 | | | 10.4 | | | 1.1 | | | 0.4 | | | 0.7 | |
| Commercial | Commercial | 35.4 | | | 9.0 | | | 26.4 | | | 22.2 | | | 4.2 | | Commercial | 12.1 | | | 12.0 | | | 0.1 | | | — | | | 0.1 | |
| Facility, provision, franchise and other | Facility, provision, franchise and other | 127.1 | | | 34.8 | | | 92.3 | | | 87.2 | | | 5.1 | | Facility, provision, franchise and other | 43.6 | | | 45.2 | | | (1.6) | | | 0.6 | | | (2.2) | |
| Share-based compensation expense | Share-based compensation expense | 5.8 | | | 3.7 | | | 2.1 | | | — | | | 2.1 | | Share-based compensation expense | 3.2 | | | 3.0 | | | 0.2 | | | — | | | 0.2 | |
| Total other operating costs and expenses | Total other operating costs and expenses | $ | 335.3 | | | $ | 96.5 | | | $ | 238.8 | | | $ | 224.6 | | | $ | 14.2 | | Total other operating costs and expenses | $ | 121.9 | | | $ | 113.8 | | | $ | 8.1 | | | $ | 1.6 | | | $ | 6.5 | |
•Personnel and contract labor: The organic increases areincrease is primarily due to higher salaries and other personnel costscosts.
•.Network-related: We incurred network-related integration costs associated with the AT&T Acquisition of $1 million during the three months ended March 31, 2022.
•Service-related: We incurred service-related integration costs associated with the AT&T Acquisition of (i) $1 million and $2 million during the three months ended September 30, 2021 and 2020, respectively, and (ii) $4 million during each of the ninethree months ended September 30, 2021March 31, 2022 and 2020.2021. The service-related integration costs incurred during 2021 are included in the increase from an acquisition (disposition), net, in the above tablesand are expected to grow in future periods.
•Commercial: The organic increases are primarily due to (i) higher call center volumes, partially attributable to work-from-home and remote learning mandates resulting from COVID-19, and (ii) increased marketing costs. In addition, during the third quarter of 2021 we incurred $1 million of commercial-related integration costs associated with the AT&T Acquisition, primarily due to rebranding, that are included in the increase from an acquisition (disposition), net, in the above tables.
•Facilities,Facility, provision, franchise and other:The organic increases are primarily due to higher bad debt provisionsdecrease is driven by individually insignificant changes across various facility, provision, franchise and for the nine-month comparison, an increase related to a $2 million payment made in the second quarter of 2021 to settle certain 2011 property tax claims.
VTR. The following tables settable sets forth the organic and non-organic changes in other operating costs and expenses for our VTR segment for the periods indicated.segment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Increase (decrease) | | Increase (decrease) from: |
| | 2021 | | 2020 | | | FX | | | Organic |
| | in millions |
| | | | | | | | | | |
| Personnel and contract labor | $ | 13.9 | | | $ | 15.3 | | | $ | (1.4) | | | $ | 0.1 | | | | $ | (1.5) | |
| Network-related | 19.2 | | | 18.0 | | | 1.2 | | | 0.1 | | | | 1.1 | |
| Service-related | 8.2 | | | 8.1 | | | 0.1 | | | 0.2 | | | | (0.1) | |
| Commercial | 20.3 | | | 18.1 | | | 2.2 | | | 0.2 | | | | 2.0 | |
| Facility, provision, franchise and other | 9.4 | | | 10.6 | | | (1.2) | | | 0.1 | | | | (1.3) | |
| Share-based compensation expense | 4.2 | | | 2.1 | | | 2.1 | | | — | | | | 2.1 | |
| Total other operating costs and expenses | $ | 75.2 | | | $ | 72.2 | | | $ | 3.0 | | | $ | 0.7 | | | | $ | 2.3 | |
| | | | Nine months ended September 30, | | Increase (decrease) | | Increase (decrease) from: | | Three months ended March 31, | | Increase (decrease) | | Increase (decrease) from: |
| | | 2021 | | 2020 | | FX | | | Organic | | 2022 | | 2021 | Increase (decrease) | | FX | | | Organic |
| | | in millions | | in millions |
| | Personnel and contract labor | Personnel and contract labor | $ | 46.8 | | | $ | 46.1 | | | $ | 0.7 | | | $ | 3.8 | | | | $ | (3.1) | | Personnel and contract labor | $ | 14.0 | | | $ | 16.1 | | | $ | (2.1) | | | $ | (1.6) | | | | $ | (0.5) | |
| Network-related | Network-related | 59.5 | | | 48.5 | | | 11.0 | | | 4.8 | | | | 6.2 | | Network-related | 18.5 | | | 21.1 | | | (2.6) | | | (2.2) | | | | (0.4) | |
| Service-related | Service-related | 28.0 | | | 25.9 | | | 2.1 | | | 2.4 | | | | (0.3) | | Service-related | 7.4 | | | 10.1 | | | (2.7) | | | (0.8) | | | | (1.9) | |
| Commercial | Commercial | 65.2 | | | 56.6 | | | 8.6 | | | 5.4 | | | | 3.2 | | Commercial | 22.6 | | | 22.3 | | | 0.3 | | | (2.6) | | | | 2.9 | |
| Facility, provision, franchise and other | Facility, provision, franchise and other | 28.8 | | | 32.6 | | | (3.8) | | | 2.3 | | | | (6.1) | | Facility, provision, franchise and other | 7.3 | | | 10.0 | | | (2.7) | | | (0.8) | | | | (1.9) | |
| Share-based compensation expense | Share-based compensation expense | 8.1 | | | 6.0 | | | 2.1 | | | 0.4 | | | | 1.7 | | Share-based compensation expense | 3.2 | | | 1.9 | | | 1.3 | | | (0.4) | | | | 1.7 | |
| Total other operating costs and expenses | Total other operating costs and expenses | $ | 236.4 | | | $ | 215.7 | | | $ | 20.7 | | | $ | 19.1 | | | | $ | 1.6 | | Total other operating costs and expenses | $ | 73.0 | | | $ | 81.5 | | | $ | (8.5) | | | $ | (8.4) | | | | $ | (0.1) | |
•Personnel and Contract LaborService-related: : The organic decreases aredecrease is primarily due to lower salary expense as a result of a restructuring program implemented during the first half of 2021.
•Network-related: The organic increases are primarily due to higher rates associated with network access-related contract labor.
•Commercial: The organic increase during the three-month comparison is primarily due to the net effect of (i) higher sales commissions, (ii) a decrease in call center rates and volumes, and (iii) an increase in marketing and advertising expenses. The organic increasecosts, primarily related to a commitment to sponsor a music festival that has been postponed during each of the nine-month comparison is primarilypast two years due to the net effect of (i) higher sales commissions, (ii) a decrease in marketing and advertising expenses, and (iii) higher call center volumes.COVID-19.
•Facility, provision, franchise and other costs: The organic decreases aredecrease is primarily due to lower bad debt provisions.operating lease expense as a result of ceasing the amortization of our right of use assets in connection with held for sale accounting of the Chile JV Entities, as further described in note 8 to our condensed consolidated financial statements..
Costa Rica. The following tables settable sets forth the organic and non-organic changes in other operating costs and expenses for our Costa Rica segment for the periods indicated.segment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Increase | | Increase (decrease) from: |
| Three months ended September 30, | | | | | An acquisition | | |
| | 2021 | | 2020 | | | FX | | | Organic |
| | in millions |
| | | | | | | | | | | |
| Personnel and contract labor | $ | 5.6 | | | $ | 3.7 | | | $ | 1.9 | | | $ | (0.2) | | | $ | 2.0 | | | $ | 0.1 | |
| Network-related | 4.5 | | | 2.4 | | | 2.1 | | | (0.2) | | | 2.3 | | | — | |
| Service-related | 3.0 | | | 0.3 | | | 2.7 | | | (0.1) | | | 1.7 | | | 1.1 | |
| Commercial | 8.0 | | | 1.8 | | | 6.2 | | | (0.5) | | | 5.9 | | | 0.8 | |
| Facility, provision, franchise and other | 11.5 | | | 3.3 | | | 8.2 | | | (0.5) | | | 8.5 | | | 0.2 | |
| Share-based compensation expense | 0.3 | | | 0.2 | | | 0.1 | | | (0.1) | | | — | | | 0.2 | |
| Total other operating costs and expenses | $ | 32.9 | | | $ | 11.7 | | | $ | 21.2 | | | $ | (1.6) | | | $ | 20.4 | | | $ | 2.4 | |
| | | | | | Increase | | Increase (decrease) from: | | | | Increase | | Increase (decrease) from: |
| | Nine months ended September 30, | | | An acquisition | | | Three months ended March 31, | | | An acquisition | |
| | | 2021 | | 2020 | | FX | | Organic | | 2022 | | 2021 | | FX | | Organic |
| | | in millions | | in millions |
| | Personnel and contract labor | Personnel and contract labor | $ | 12.6 | | | $ | 11.7 | | | $ | 0.9 | | | $ | (0.8) | | | $ | 2.0 | | | $ | (0.3) | | Personnel and contract labor | $ | 7.4 | | | $ | 3.4 | | | $ | 4.0 | | | $ | (0.2) | | | $ | 3.8 | | | $ | 0.4 | |
| Network-related | Network-related | 8.8 | | | 6.5 | | | 2.3 | | | (0.5) | | | 2.3 | | | 0.5 | | Network-related | 8.7 | | | 2.9 | | | 5.8 | | | (0.2) | | | 5.6 | | | 0.4 | |
| Service-related | Service-related | 4.8 | | | 1.2 | | | 3.6 | | | (0.3) | | | 1.7 | | | 2.2 | | Service-related | 5.4 | | | 0.8 | | | 4.6 | | | — | | | 4.6 | | | — | |
| Commercial | Commercial | 11.9 | | | 5.1 | | | 6.8 | | | (0.7) | | | 5.9 | | | 1.6 | | Commercial | 13.7 | | | 1.8 | | | 11.9 | | | (0.1) | | | 11.6 | | | 0.4 | |
| Facility, provision, franchise and other | Facility, provision, franchise and other | 17.9 | | | 10.2 | | | 7.7 | | | (1.0) | | | 8.5 | | | 0.2 | | Facility, provision, franchise and other | 16.6 | | | 3.0 | | | 13.6 | | | (0.1) | | | 13.2 | | | 0.5 | |
| Share-based compensation expense | Share-based compensation expense | 0.7 | | | 0.6 | | | 0.1 | | | (0.1) | | | — | | | 0.2 | | Share-based compensation expense | 0.9 | | | 0.1 | | | 0.8 | | | — | | | 0.6 | | | 0.2 | |
| Total other operating costs and expenses | Total other operating costs and expenses | $ | 56.7 | | | $ | 35.3 | | | $ | 21.4 | | | $ | (3.4) | | | $ | 20.4 | | | $ | 4.4 | | Total other operating costs and expenses | $ | 52.7 | | | $ | 12.0 | | | $ | 40.7 | | | $ | (0.6) | | | $ | 39.4 | | | $ | 1.9 | |
•Service-related:During the three months ended March 31, 2022, we We incurred $2 million of integration costs associated with the Telefónica-Costanica Costa Rica Acquisition of approximately $1 million in each of the three and nine months ended September 30, 2021. The integration costs incurred during 2021that are primarily included in the increase from an acquisition andset forth in the table above. Integration costs are expected to grow significantly in future periods.during the remainder of 2022.
Corporate. The following tables settable sets forth the organic changes in other operating costs and expenses for our corporate operations for the periods indicated.operations.
| | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Organic increase (decrease) |
| | 2021 | | 2020 | |
| | in millions |
| | | | | |
| Personnel and contract labor | $ | 9.2 | | | $ | 4.6 | | | $ | 4.6 | |
| Network-related | — | | | 1.1 | | | (1.1) | |
| Service-related | 5.7 | | | 3.4 | | | 2.3 | |
| Facility, provision, franchise and other | 5.4 | | | 2.3 | | | 3.1 | |
| Share-based compensation expense | 15.1 | | | 16.5 | | | (1.4) | |
| Total other operating costs and expenses | $ | 35.4 | | | $ | 27.9 | | | $ | 7.5 | |
| | | | Nine months ended September 30, | | Organic increase (decrease) | | Three months ended March 31, | | Organic increase (decrease) |
| | | 2021 | | 2020 | | | 2022 | | 2021 | |
| | | in millions | | in millions |
| | Personnel and contract labor | Personnel and contract labor | $ | 23.4 | | | $ | 15.5 | | | $ | 7.9 | | Personnel and contract labor | $ | 9.1 | | | $ | 5.0 | | | $ | 4.1 | |
| Network-related | — | | | 1.4 | | | (1.4) | | |
| | Service-related | Service-related | 14.0 | | | 9.2 | | | 4.8 | | Service-related | 3.6 | | | 4.6 | | | (1.0) | |
| Facility, provision, franchise and other | Facility, provision, franchise and other | 16.7 | | | 7.8 | | | 8.9 | | Facility, provision, franchise and other | 6.7 | | | 6.3 | | | 0.4 | |
| Share-based compensation expense | Share-based compensation expense | 45.8 | | | 41.6 | | | 4.2 | | Share-based compensation expense | 14.4 | | | 11.1 | | | 3.3 | |
| Total other operating costs and expenses | Total other operating costs and expenses | $ | 99.9 | | | $ | 75.5 | | | $ | 24.4 | | Total other operating costs and expenses | $ | 33.8 | | | $ | 27.0 | | | $ | 6.8 | |
•Personnel and contract labor: The organic increases areincrease is primarily attributable to higher salaries and other personnel costs, mainly resulting from higher staffing levels in the operations center in Panama.
•Service-related: The organic increases are primarily due to increases in professional services related to centralization efforts.
•Facility, provision, franchise and other: The organic increases are primarily attributable to higher expenses associated with a mobile handset insurance program that began during the fourth quarter of 2020 following the closing of the AT&T Acquisition.
Results of Operations (below Adjusted OIBDA)
Share-based compensation expense (included in other operating costs and expenses)
Share-based compensation expense increased $5$7 million and $14 million forduring the three and nine months ended September 30, 2021, respectively,March 31, 2022, as compared to the corresponding periodsperiod in 2020,2021, primarily due to increases in grants awardedadditional equity awards granted to our employees and Directors.
For additional information regarding our share-based compensation, see note 15 to our condensed consolidated financial statements.
Depreciation and amortization
Our depreciation and amortization expense increased $22decreased $29 million or 9% and $92 million or 14%12% during the three and nine months ended September 30, 2021, respectively,March 31, 2022, as compared to the corresponding periodsperiod in 2020,2021, primarily due to the net effect of (i) increasesa $43 million decline at VTR as we ceased recording depreciation expense during the third quarter of $29 million and $59 million, respectively, attributable to assets acquired by Liberty Puerto Rico following2021 when we began accounting for the closing of the AT&T Acquisition, (ii)Chile JV Entities as held for sale, decreases associated with certain assets becoming fully depreciated,(ii) an increase in our Costa Rica segment resulting from the Telefónica Costa Rica Acquisition, and (iii) increasesan increase in property and equipment additions primarily associated with the installation of CPE, the expansion and upgrade ofmainly at our networks and other capital initiatives and baseline related additions, (iv) during the nine-month comparison, an increase due to $10 million of accelerated depreciation recognized in the second quarter of 2021 associated with assets no longer in service at VTR.Puerto Rico segment.
Impairment, restructuring and other operating items, net
The details of our impairment, restructuring and other operating items, net, are as follows:
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions | | | in millions |
| Impairment charges (a) | Impairment charges (a) | $ | 0.1 | | | $ | 1.3 | | | $ | 3.0 | | | $ | 280.0 | | Impairment charges (a) | | $ | 1.9 | | | $ | 2.3 | |
Restructuring charges (b) | Restructuring charges (b) | 9.6 | | | 1.5 | | | 24.6 | | | 13.9 | | Restructuring charges (b) | | 2.7 | | | 1.8 | |
Other operating items, net (c)(a) | Other operating items, net (c)(a) | 12.4 | | | 11.2 | | | 13.7 | | | 37.6 | | Other operating items, net (c)(a) | | 3.2 | | | (1.9) | |
| Total | Total | $ | 22.1 | | | $ | 14.0 | | | $ | 41.3 | | | $ | 331.5 | | Total | | $ | 7.8 | | | $ | 2.2 | |
(a)The 20202022 amount for the nine-month period primarily includes goodwill impairment charges of $177 million at C&W Panama and $102 million at various reporting units within the C&W Caribbean and Networks segment mostly related to the economic impacts associated with COVID-19.
(b)Amounts include employee severance and termination costs related to certain reorganization activities and contract termination and other related charges, primarily at VTR and C&W Caribbean and Networks.
(c)direct acquisition costs. The 2021 amountsamount primarily include direct acquisition costs related to the Telefónica-Costa Rica Acquisition and, for the nine-month period,includes a gain of $9 million on the disposition of certain B2B operations in our Liberty Puerto Rico segment that was completed in January 2021.The 2020 amounts primarily include2021, which was more than offset by direct acquisition costs related to the AT&T Acquisition.of $7 million, and impairment and restructuring costs.
Interest expense
Our interest expense increased (decreased) $7$3 million and ($11 million) during the three and nine months ended September 30, 2021, respectively,March 31, 2022, as compared to the corresponding periodsperiod in 2020.2021. The increase in the three-month comparison, is primarily attributable to the net effecthigher amortization of (i) higher average outstanding debt balancesfinancing costs, premiums and (ii) lower weighted average interest rates. The decrease in the nine-month comparison is primarily attributable to the net effect of (i) lower weighted-average interest rates and (ii) higher average outstanding debt balances.discounts.
For additional information regarding our outstanding indebtedness, see note 9 to our condensed consolidated financial statements.
It is possible that the interest rates on (i) any new borrowings could be higher than the current interest rates on our existing indebtedness and (ii) our variable-rate indebtedness could increase in future periods. As further discussed in note 5 to our condensed consolidated financial statements, we use derivative instruments to manage our interest rate risks.
Realized and unrealized gains (losses)or losses on derivative instruments, net
Our realized and unrealized gains or losses on derivative instruments primarily include (i) unrealized changes in the fair values of our derivative instruments that are non-cash in nature until such time as the derivative contracts are fully or partially settled and (ii) realized gains or losses upon the full or partial settlement of the derivative contracts. The details of our realized and unrealized gains (losses) on derivative instruments, net, are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| | in millions |
| | | | | | | |
| Cross-currency and interest rate derivative contracts (a) (b) | $ | 285.1 | | | $ | (70.7) | | | $ | 464.2 | | | $ | (234.7) | |
| Foreign currency forward contracts | 15.4 | | | (2.3) | | | 20.1 | | | 5.8 | |
| Weather Derivatives (c) | (8.5) | | | (5.1) | | | (20.1) | | | (10.8) | |
| Total | $ | 292.0 | | | $ | (78.1) | | | $ | 464.2 | | | $ | (239.7) | |
| | | | | | | | | | | | | | | |
| | | | Three months ended March 31, |
| | | | | | 2022 | | 2021 |
| | | | | | in millions |
| | | | | | | |
| Cross-currency and interest rate derivative contracts (a) | | | | | $ | (17.6) | | | $ | 119.5 | |
| Foreign currency forward contracts | | | | | (8.3) | | | 0.7 | |
| Weather Derivatives (b) | | | | | (7.8) | | | (5.3) | |
| Total | | | | | $ | (33.7) | | | $ | 114.9 | |
(a)The gains (losses) during the three and nine months ended September 30,March 31, 2022 and 2021 and 2020 are primarily attributable to the net effect of (i) changes in FX rates, predominantly due to changes in the value of the Chilean peso relative to the U.S. dollar, and (ii) changes in interest rates. These amounts include gains (losses)net losses associated with changes in our credit risk valuation adjustments of ($15 million) and ($44$5 million) during the three and nine months ended September 30, 2021, respectively, and $1$21 million, and $41 million during the three and nine months ended September 30, 2020, respectively, which for the 2020 periods are primarily due to increased credit risk stemming from market reaction to the COVID-19 outbreak.respectively. Included in these amounts for the three and nine months ended September 30, 2021 are net lossesgains (losses) of $12$2 million and $29 million,($4 million), respectively, related to the Chile JV Entities.
(b)The losses for the nine months ended September 30, 2020 include a realized gain of $71 million associated with the settlement of certain cross-currency interest rate swaps at VTR in June 2020 that were unwound in connection with the refinancing of certain VTR debt in 2020.
(c)Amounts represent the amortization of premiums associated with our Weather Derivatives.
For additional information concerning our derivative instruments, see notes 5 and 6 to our condensed consolidated financial statements and Item 3. Quantitative and Qualitative Disclosures about Market Risk below.
Foreign currency transaction gains (losses),or losses, net
Our foreign currency transaction gains or losses primarily result from the remeasurement of monetary assets and liabilities that are denominated in currencies other than the underlying functional currency of the applicable entity. Unrealized foreign currency transaction gains or losses are computed based on period-end exchange rates and are non-cash in nature until such time as the amounts are settled. The details of our foreign currency transaction gains (losses), net, are as follows:
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | in millions | | | in millions |
| | U.S. dollar-denominated debt issued by a Chilean peso functional currency entity | U.S. dollar-denominated debt issued by a Chilean peso functional currency entity | $ | (145.2) | | | $ | 55.5 | | | $ | (177.0) | | | $ | (50.9) | | U.S. dollar-denominated debt issued by a Chilean peso functional currency entity | | $ | 118.0 | | | $ | (4.1) | |
| Intercompany payables and receivables denominated in a currency other than the entity’s functional currency | Intercompany payables and receivables denominated in a currency other than the entity’s functional currency | 6.9 | | | (16.7) | | | (19.9) | | | (47.6) | | Intercompany payables and receivables denominated in a currency other than the entity’s functional currency | | 8.1 | | | (16.2) | |
| Other (a) | Other (a) | 2.1 | | | (8.7) | | | (9.1) | | | (16.6) | | Other (a) | | (29.5) | | | (5.1) | |
| Total | Total | $ | (136.2) | | | $ | 30.1 | | | $ | (206.0) | | | $ | (115.1) | | Total | | $ | 96.6 | | | $ | (25.4) | |
(a) Primarily includes (i) third-party receivables and payables denominated in a currency other than an entity’s functional currency, (ii) cash denominated in a currency other than an entity’s functional currency and (iii) U.S. dollar-denominated debt issued by a Costa Rica colónCRC functional currency entity.
LossesGains or losses on debt modification and extinguishment, net
Our gains or losses on debt modification and extinguishment generally include (i) redemption premiums, (ii) the write-off of unamortized deferred financing costs, premiums and/or discounts and/or (iii) breakage fees.
We recognized losses on debt extinguishment of $2 millionnil and $25$23 million during the three and nine months ended September 30,March 31, 2022 and 2021, respectively, and $42 million and $45 million during the three and nine months ended September 30, 2020, respectively. The losses during 2021 are primarily associated with (i) the write-off of unamortized discountsrefinancing activity at Liberty Puerto Rico and deferred financing costs related to the repayment of the 2026 SPV Credit Facility, (ii) the payment of breakage fees and the write-off of unamortized deferred financing costs related to the repayments of the VTR TLB-1 Facility and VTR TLB-2 Facility and (iii) the payments of redemption premiums and the write-offs of unamortized deferred financing costs related to partial redemptions of the 2028 VTR Senior Secured Notes. The losses during 2020 are associated with (i) the payment of call premiums and the write-off of unamortized deferred financing costs related to the repayment of certain senior notes then outstanding at VTR during the third quarter of 2020 and (ii) the write-off of unamortized discounts and deferred financing costs associated with the repayment of the C&W Term Loan B-4 Facility during the first quarter.VTR.
For additional information concerning our losses on debt extinguishment, see note 9 to our condensed consolidated financial statements.
Other income (expense),or expense, net
Our otherincome andor expense, net, generally includes (i) certain amounts associated with our defined benefit plans, including interest expense and expected return on plan assets, and (ii) interest income on cash and cash equivalents, and restricted cash.
We recognized other(iii) share of affiliate income (expense), net, of ($41 million) and ($42 million) duringor loss. Other income or expense was not material for the three and nine months ended September 30, 2021, respectively,March 31, 2022 and nil and $12 million during the three and nine months ended September 30, 2020, respectively. During the third quarter of 2021, we recognized an impairment related to a cost method investment. During the 2020 periods, we generated interest income on restricted cash held in escrow in advance of the closing of the AT&T Acquisition.2021.
Income tax benefit (expense)expense
We recognized income tax benefit (expense)expense of ($39 million) and ($105 million) during the three and nine months ended September 30, 2021, respectively, and $43$24 million and $33$30 million during the three and nine months ended September 30, 2020,March 31, 2022 and 2021, respectively.
For the three and nine months ended September 30, 2021,March 31, 2022, the income tax expense attributable to our earnings before income taxes differs from the amounts computed using the statutory tax rate, primarily due to the net detrimental effects of international rate differences, net increases in valuation allowances, and negative effects of permanent tax differences, such as non-deductible expenses, and inclusion of withholding taxes on cross-border payments.expenses. These negative impacts to our effective tax rate were partially offset by the beneficial effects of permanent tax differences, such as non-taxable income.
For the three months ended September 30,March 31, 2021, the income tax expense reflects net favorable changes in uncertain tax positions. For the nine months ended September 30, 2021, income tax expense reflects net unfavorable changes in uncertain tax positions.
For the three and nine months ended September 30, 2020,the income tax benefit attributable to our lossearnings before income taxes differs from the amounts computed using the statutory tax rate,primarily due to the beneficialnet detrimental effects of international rate differences, net favorableincreases in valuation allowances, changes in uncertain tax positions, and negative effects of permanent items,tax differences, such as non-taxable income.non-deductible expenses. These beneficialnegative impacts to our effective tax rate were partially offset by the negativebeneficial effects of increases in valuation allowances, permanent items,tax differences, such as non-deductible goodwill impairment and other non-deductible expenses, as well as the inclusion of withholding taxes on cross-border payments. For the three and nine months ended September 30, 2020, we satisfied requirements imposed under recent tax reforms and, as a result, reduced our uncertain tax positions by $20 million. Additionally, during the nine months ended September 30, 2020, we closed certain tax audits and, as a result, reduced our uncertain tax positions by $18 million. These amounts have been reflected as discrete tax benefits in our condensed consolidated statement of operations.non-taxable income.
For additional information regarding our income taxes, see note 14 to our condensed consolidated financial statements.
Net earnings (loss)or loss
The following table sets forth selected summary financial information of our net earnings (loss):earnings:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| | in millions |
| | | | | | | |
Operating income (loss) | $ | 137.4 | | | $ | 86.6 | | | $ | 475.8 | | | $ | (11.6) | |
| Net non-operating expenses | $ | (24.3) | | | $ | (219.4) | | | $ | (206.3) | | | $ | (796.6) | |
| Income tax benefit (expense) | $ | (39.1) | | | $ | 42.8 | | | $ | (105.1) | | | $ | 33.4 | |
| Net earnings (loss) | $ | 74.0 | | | $ | (90.0) | | | $ | 164.4 | | | $ | (774.8) | |
| | | | | | | | | | | | | | | |
| | | | Three months ended March 31, |
| | | | | | 2022 | | 2021 |
| | | | | | in millions |
| | | | | | | |
Operating income | | | | | $ | 188.3 | | | $ | 181.0 | |
| Net non-operating expenses | | | | | $ | (71.6) | | | $ | (60.8) | |
| Income tax expense | | | | | $ | (23.5) | | | $ | (29.5) | |
| Net earnings | | | | | $ | 93.2 | | | $ | 90.7 | |
Gains or losses associated with (i) changes in the fair values of derivative instruments and (ii) movements in foreign currency exchange rates are subject to a high degree of volatility and, as such, any gains from these sources do not represent a reliable source of income. In the absence of significant gains in the future from these sources or from other non-operating items, our ability to achieve earnings is largely dependent on our ability to increase our aggregate Adjusted OIBDA to a level that more than offsets the aggregate amount of our (i) share-based compensation expense, (ii) depreciation and amortization, (iii)
impairment, restructuring and other operating items, (iv) interest expense, (v) other non-operating expenses and (vi) income tax expenses.
Due largely to the fact that we seek to maintain our debt at levels that provide for attractive equity returns, as discussed under Material Changes in Financial Condition—Capitalization below, we expect that we will continue to report significant levels of interest expense for the foreseeable future.
Net earnings or loss attributable to noncontrolling interests
We reported net lossesearnings attributable to noncontrolling interests of $4$10 million and $6$2 million during the three2022 and nine months ended September 30, 2021, respectively, and $5 million and $117 million during the three and nine months ended September 30, 2020, respectively.
Material Changes in Financial Condition
Sources and Uses of Cash
As of September 30, 2021,March 31, 2022, we have four primary “borrowing groups,” which include the respective restricted parent and subsidiary entities of C&W, Liberty Puerto Rico, VTR and Costa Rica. Our borrowing groups, which typically generate cash from operating activities, held a significant portion of our consolidated cash and cash equivalents at September 30, 2021.March 31, 2022. Our ability to access the liquidity of these and other subsidiaries may be limited by tax and legal considerations, the presence of noncontrolling interests, foreign currency exchange restrictions with respect to certain C&W subsidiaries and other factors. For details of the restrictions on our subsidiaries to make payments to us through dividends, loans or other distributions see note 9 to our condensed consolidated financial statements.
Cash and cash equivalents
The details of the U.S. dollar equivalent balances of our cash and cash equivalents at September 30, 2021March 31, 2022 are set forth in the following table (in millions):
| | | | | |
| Cash and cash equivalents held by: | |
| Liberty Latin America and unrestricted subsidiaries: | |
| Liberty Latin America (a) | $ | 87.321.2 | |
| Unrestricted subsidiaries (b) | 60.6141.3 | |
| Total Liberty Latin America and unrestricted subsidiaries | 147.9162.5 | |
| Borrowing groups (c): | |
| C&W | 548.1541.3 | |
| Liberty Puerto Rico | 163.3103.6 | |
| VTR (d) | 21.332.1 | |
| Costa Rica | 36.417.1 | |
| Total borrowing groups | 769.1694.1 | |
| Total cash and cash equivalents | $ | 917.0856.6 | |
(a)Represents the amount held by Liberty Latin America on a standalone basis.
(b)Represents the aggregate amount held by subsidiaries of Liberty Latin America that are outside of our borrowing groups. All of these companies rely on funds provided by our borrowing groups to satisfy their liquidity needs.
(c)Represents the aggregate amounts held by the parent entity of the applicable borrowing group and their restricted subsidiaries.
(d)Represents excess cash of VTR retained by Liberty Latin America. Cash of $154$67 million associated with the Chile JV Entities has been reflected asin assets held for sale on our March 31, 2022 condensed consolidated balance sheet. Accordingly, the cash of VTR set forth in the table above reflects certain cash and cash equivalent balances of the Chile JV Entities that Liberty Latin America is able to retain upon the formation of the Chile JV and are therefore not classified as held for sale.
Liquidity and capital resources of Liberty Latin America and its unrestricted subsidiaries
Our current sources of corporate liquidity include (i) cash and cash equivalents held by Liberty Latin America and, subject to certain tax and legal considerations, Liberty Latin America’s unrestricted subsidiaries, and (ii) interest and dividend income received on our and, subject to certain tax and legal considerations, our unrestricted subsidiaries’ cash and cash equivalents and investments. From time to time, Liberty Latin America and its unrestricted subsidiaries may also receive (i) proceeds in the
form of distributions or loan repayments from Liberty Latin America’s borrowing groups upon (a) the completion of recapitalizations, refinancings, asset sales or similar transactions by these entities or (b) the accumulation of excess cash from operations or other means, (ii) proceeds upon the disposition of investments and other assets of Liberty Latin America and its unrestricted subsidiaries and (iii) proceeds in connection with the incurrence of debt by Liberty Latin America or its unrestricted subsidiaries or the issuance of equity securities by Liberty Latin America. No assurance can be given that any external funding would be available to Liberty Latin America or its unrestricted subsidiaries on favorable terms, or at all. As noted above, various factors may limit our ability to access the cash of our borrowing groups.
Our corporate liquidity requirements include (i) corporate general and administrative expenses and (ii) other liquidity needs that may arise from time to time. In addition, Liberty Latin America and its unrestricted subsidiaries may require cash in connection with (i) the repayment of third-party and intercompany debt, (ii) the satisfaction of contingent liabilities, (iii) acquisitions and other investment opportunities, (iv) the repurchase of debt securities, (v) tax payments or (vi) any funding requirements of our consolidated subsidiaries.
In March 2020, our Directors approved the Share Repurchase Program. During the three months ended September 30, 2021,March 31, 2022, the aggregate amount of our share repurchases was $20$56 million. For additional information regarding our Share Repurchase Program,Programs, see note 1716 to our condensed consolidated financial statements and Part II—Item 2 Unregistered Sales of Equity Securities and Use of Proceeds below.
Liquidity and capital resources of borrowing groups
The cash and cash equivalents of our borrowing groups are detailed in the table above. In addition to cash and cash equivalents, the primary sources of liquidity of our borrowing groups are cash provided by operations and borrowing availability under their respective debt instruments. For the details of the borrowing availability of our borrowing groups at September 30, 2021,March 31, 2022, see note 9 to our condensed consolidated financial statements. The aforementioned sources of liquidity may be supplemented in certain cases by contributions and/or loans from Liberty Latin America and its unrestricted subsidiaries. The liquidity of our borrowing groups generally is used to fund capital expenditures, debt service requirements and income tax payments. From time to time, our borrowing groups may also require liquidity in connection with (i) acquisitions and other investment opportunities, (ii) loans to Liberty Latin America, (iii) capital distributions to Liberty Latin America and other equity owners or (iv) the satisfaction of contingent liabilities. No assurance can be given that any external funding would be available to our borrowing groups on favorable terms, or at all. For information regarding our borrowing groups’ commitments and contingencies, see note 18 to our condensed consolidated financial statements.
For additional information regarding our cash flows, see the discussion under Condensed Consolidated Statements of Cash Flows below.
Capitalization
We seek to maintain our debt at levels that provide for attractive equity returns without assuming undue risk. When it is cost effective, we generally seek to match the denomination of the borrowings of our subsidiaries with the functional currency of the operations that support the respective borrowings. As further discussed under Item 3. Quantitative and Qualitative Disclosures about Market Risk and in note 5 to our condensed consolidated financial statements, we also use derivative instruments to mitigate foreign currency and interest rate risks associated with our debt instruments.
Our ability to service or refinance our debt and to maintain compliance with the leverage covenants in the credit agreements of our borrowing groups is dependent primarily on our ability to maintain covenant EBITDA of our operating subsidiaries, as specified by our subsidiaries’ debt agreements (Covenant EBITDA), and to achieve adequate returns on our property and equipment additions and acquisitions. In addition, our ability to obtain additional debt financing is limited by incurrence-based leverage covenants contained in the various debt instruments of our borrowing groups. For example, if the Covenant EBITDA of one of our borrowing groups were to decline, our ability to support or obtain additional debt in that borrowing group could be limited. No assurance can be given that we would have sufficient sources of liquidity, or that any external funding would be available on favorable terms, or at all, to fund any such required repayment. At September 30, 2021,March 31, 2022, each of our borrowing groups was in compliance with its debt covenants.We do not anticipate any instances of non-compliance with respect to the debt covenants of our borrowing groups that would have a material adverse impact on our liquidity during the next 12 months.
At September 30, 2021,March 31, 2022, the outstanding principal amount of our debt, together with our finance lease obligations, excluding VTR, aggregated $7,642$7,707 million, including $76$118 million that is classified as current in our condensed consolidated balance sheet and $5,895$6,710 million that is not due until 2027 or thereafter. At September 30, 2021, $7,237March 31, 2022, $7,303 million of our debt and finance lease obligations have been borrowed or incurred by our subsidiaries. Included in the outstanding principal amount of
our debt at September 30, 2021March 31, 2022 is $82$118 million of vendor financing, which we use to finance certain of our operating expenses and property and equipment additions. These obligations are generally due within one year, other than for certain licensing arrangements that generally are due over the term of the related license. For additional information concerning our debt, including our debt maturities, see note 9 to our condensed consolidated financial statements.
The weighted average interest rate in effect at September 30, 2021March 31, 2022 for all borrowings outstanding pursuant to each debt instrument, including any applicable margin, was 5.1%4.9%. The interest rate is based on stated rates and does not include the impact of derivative instruments, deferred financing costs, original issue premiums or discounts and commitment fees, all of which affect our overall cost of borrowing. The weighted average impact of the derivative instruments, excluding forward-starting derivative instruments, on our borrowing costs at September 30, 2021March 31, 2022 was as follows:
| | | | | | | | |
| Borrowing group | | Increase to borrowing costs |
| | |
| C&W | 0.60.60 | % |
| Liberty Puerto Rico | 0.40.40 | % |
| Costa Rica | 0.40.40 | % |
| Liberty Latin America borrowing groups combined | 0.50.49 | % |
Including the effects of derivative instruments, original issue premiums or discounts, including the discount on the Convertible Notes associated with the instrument’s conversion option, and commitment fees, but excluding the impact of financing costs, the weighted average interest rate on our indebtedness was 5.9%5.6% at September 30, 2021.March 31, 2022.
We believe that we have sufficient resources to repay or refinance the current portion of our debt and finance lease obligations and to fund our foreseeable liquidity requirements during the next 12 months. However, as our debt maturities grow in later years, we anticipate that we will seek to refinance or otherwise extend our debt maturities. No assurance can be given that we will be able to complete refinancing transactions or otherwise extend our debt maturities. In this regard, it is difficult to predict how political, economic and social conditions, sovereign debt concerns or any adverse regulatory developments will impact the credit and equity markets we access and our future financial position. Our ability to access debt financing on favorable terms, or at all, could be adversely impacted by (i) the financial failure of any of our counterparties, which could (a) reduce amounts available under committed credit facilities and (b) adversely impact our ability to access cash deposited with any failed financial institution, and (ii) tightening of the credit markets. In addition, any weakness in the equity markets could make it less attractive to use our shares to satisfy contingent or other obligations, and sustained or increased competition, particularly in combination with adverse economic or regulatory developments, could have an unfavorable impact on our cash flows and liquidity.
Condensed Consolidated Statements of Cash Flows
General. Our cash flows are subject to variations due to FX.
Summary. Our condensed consolidated statements of cash flows for the ninethree months ended September 30,March 31, 2022 and 2021 and 2020 are summarized as follows:
| | | | Nine months ended September 30, | | | Three months ended March 31, | |
| | | 2021 | | 2020 | | Change | | 2022 | | 2021 | | Change |
| | | in millions | | in millions |
| | Net cash provided by operating activities | Net cash provided by operating activities | $ | 717.8 | | | $ | 491.0 | | | $ | 226.8 | | Net cash provided by operating activities | $ | 122.3 | | | $ | 203.5 | | | $ | (81.2) | |
| Net cash used by investing activities | Net cash used by investing activities | (1,075.3) | | | (418.9) | | | (656.4) | | Net cash used by investing activities | (189.0) | | | (126.4) | | | (62.6) | |
Net cash provided by financing activities | 530.6 | | | 464.9 | | | 65.7 | | |
| Net cash provided (used) by financing activities | | Net cash provided (used) by financing activities | (78.2) | | | 333.0 | | | (411.2) | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | Effect of exchange rate changes on cash, cash equivalents and restricted cash | (6.7) | | | (11.1) | | | 4.4 | | Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2.0 | | | 2.8 | | | (0.8) | |
Net increase in cash, cash equivalents and restricted cash | $ | 166.4 | | | $ | 525.9 | | | $ | (359.5) | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (142.9) | | | $ | 412.9 | | | $ | (555.8) | |
Operating Activities. The increasedecrease in cash provided by operating activities is primarily due to the net impact of (i) an increasetiming associated with changes in Adjusted OIBDA of our Liberty Puerto Rico segment and (ii) a decrease related to working capital, including a $77 million increase in cash used related to derivative activities. For additional information regarding cash used for derivative activities, see note 5 to the condensed consolidated financial statements.
Investing Activities. The increase in net cash used by our investing activities is primarily attributable to the net effect of (i) cash used in connection with the Telefónica-Costa Rica Acquisition that closed in August 2021, as further described in note 4 to the condensed consolidated financial statements, (ii) an increase in cash used for capital expenditures, as further discussed below, (ii) cash paid during the 2022 period in connection with acquisitions, net of cash acquired, and (iii) $20 million of cash proceeds from asset dispositions, and (iv)received during the 2021 period related to the disposition of assets. During the 2022 period, we paid $33 million in connection with the Broadband VI, LLC Acquisition that closed in December 2021, which was partially offset by $8 million cash used for investments.received in connection with the Telefónica Costa Rica Acquisition, as further described in note 4 to the condensed consolidated financial statements.
The capital expenditures that we report in our condensed consolidated statements of cash flows, which includes cash paid for property and equipment and intangible assets that were not acquired not part ofin connection with an acquisition, does not include amounts that are financed under capital-related vendor financing or finance lease arrangements. Instead, these amounts are reflected as non-cash additions to our property and equipment when the underlying assets are delivered and as repayments of debt when the principal is repaid. In this discussion, we refer to (i) our capital expenditures, as reported in our condensed consolidated statements of cash flows, and (ii) our total property and equipment additions, which include our capital expenditures on an accrual basis and amounts financed under capital-related vendor financing or finance lease arrangements.
A reconciliation of our property and equipment additions to our capital expenditures, as reported in our condensed consolidated statements of cash flows, is set forth below:
| | | Nine months ended September 30, | | Three months ended March 31, |
| | 2021 | | 2020 | | 2022 | | 2021 |
| | in millions | | in millions |
| | Property and equipment additions | Property and equipment additions | $ | 599.0 | | | $ | 443.1 | | Property and equipment additions | $ | 175.4 | | | $ | 152.4 | |
| Assets acquired under capital-related vendor financing arrangements | Assets acquired under capital-related vendor financing arrangements | (65.0) | | | (80.5) | | Assets acquired under capital-related vendor financing arrangements | (31.9) | | | (18.8) | |
| Changes in current liabilities related to capital expenditures | Changes in current liabilities related to capital expenditures | 10.7 | | | 55.7 | | Changes in current liabilities related to capital expenditures | 21.2 | | | 2.0 | |
| Capital expenditures | Capital expenditures | $ | 544.7 | | | $ | 418.3 | | Capital expenditures | $ | 164.7 | | | $ | 135.6 | |
The increase in our property and equipment additions during the ninethree months ended September 30, 2021,March 31, 2022, as compared to the corresponding period in 2020,2021, is primarily due to increases related to capacity, baselineCPE-related additions and CPE-related additions.capacity. During the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, our property and equipment additions represented 17.0%14.4% and 16.6%13.1% of revenue, respectively.
Financing Activities. During the ninethree months ended September 30, 2021,March 31, 2022, we generated $531used $78 million of cash from financing activities, primarily due to the net effect of (i) $602 million of net borrowings of debt, (ii) $47 million related to the contribution from noncontrolling interest owner, as further described in note 17 of the condensed consolidated financial statements, (iii) $43 million related to derivative payments, (iv) $37 million related to payments of financing costs and debt redemption premiums and (v) $30$55 million associated with the repurchase of Liberty Latin America common shares that resumed during the second quarterand (ii) $12 million of 2021.net payments of debt.
During the ninethree months ended September 30, 2020,March 31, 2021, we generated $465$333 million of cash from financing activities primarily due to (i) $350 million related to the Rights Offering, (ii) $181 million of net cash received related to derivative instruments and (iii) $30$408 million of net borrowings of debt. These items were slightlydebt, which was partially offset by $75$43 million related to payments of derivatives and $27 million related to payments of financing costs and debt redemption premiums. The net cash received related to derivative instruments is primarily due to the unwinding of cross-currency swaps held at our VTR borrowing group as further described in note 5 to the condensed consolidated financial statements.
Adjusted Free Cash Flow
We define adjusted free cash flow, a non-GAAP measure, as net cash provided by our operating activities, plus (i) cash payments for third-party costs directly associated with successful and unsuccessful acquisitions and dispositions, (ii) expenses financed by an intermediary, (iii) insurance recoveries related to damaged and destroyed property and equipment, and (iv) certain net interest payments (receipts) incurred or received, including associated derivative instrument payments and receipts, in advance of a significant acquisition, less (a) capital expenditures, (b) distributions to noncontrolling interest owners, (c) principal payments on amounts financed by vendors and intermediaries and (d) principal payments on finance leases. We believe that our presentation of adjusted free cash flow provides useful information to our investors because this measure can be used to gauge our ability to service debt and fund new investment opportunities. Adjusted free cash flow should not be understood to represent our ability to fund discretionary amounts, as we have various mandatory and contractual obligations, including debt repayments, which are not deducted to arrive at this amount. Investors should view adjusted free cash flow as a
supplement to, and not a substitute for, U.S. GAAP measures of liquidity included in our condensed consolidated statements of cash flows.
The following table provides the details of our adjusted free cash flow:
| | | | | | | | | | | |
| | Nine months ended September 30, |
| | 2021 | | 2020 |
| in millions |
| | | |
| Net cash provided by operating activities | $ | 717.8 | | | $ | 491.0 | |
| Cash payments for direct acquisition and disposition costs | 22.1 | | | 21.7 | |
| Expenses financed by an intermediary (a) | 81.9 | | | 78.1 | |
| Capital expenditures | (544.7) | | | (418.3) | |
| Distributions to noncontrolling interest owners | (1.3) | | | (2.3) | |
| Principal payments on amounts financed by vendors and intermediaries | (137.0) | | | (143.4) | |
| Pre-acquisition interest payments, net (b) | 11.2 | | | 34.1 | |
| Principal payments on finance leases | (1.5) | | | (1.7) | |
| Adjusted free cash flow | $ | 148.5 | | | $ | 59.2 | |
(a)For purposes of our condensed consolidated statements of cash flows, expenses, including VAT, financed by an intermediary are treated as operating cash outflows and financing cash inflows when the expenses are incurred. When we pay the financing intermediary, we record financing cash outflows in our consolidated statements of cash flows. For purposes of our adjusted free cash flow definition, we add back the operating cash outflows when these financed expenses are incurred and deduct the financing cash outflows when we pay the financing intermediary.
(b)The amount for the 2021 period relates to (i) the Cabletica Term Loan B-1 Facility and Cabletica Term Loan B-2 Facility that were entered into in advance of the Telefónica-Costa Rica Acquisition, and (ii) the portion of interest paid in April 2021 that relates to pre-acquisition debt for the AT&T Acquisition. The amount for the 2020 period represents interest paid on pre-acquisition debt related to the AT&T Acquisition, net of interest received on cash held in escrow in advance of the closing of the AT&T Acquisition.
Off Balance Sheet Arrangements
In the ordinary course of business, we may provide (i) indemnifications to our lenders, our vendors and certain other parties and (ii) performance and/or financial guarantees to local municipalities, our customers and vendors. Historically, these arrangements have not resulted in our company making any material payments and we do not believe that they will result in material payments in the future.
Contractual Commitments
For information concerning our debt and operating lease obligations, see notes 9 and 10, respectively, to our condensed consolidated financial statements. In addition, we have commitments under (i) derivative instruments and (ii) defined benefit plans and similar agreements, pursuant to which we expect to make payments in future periods. For information regarding projected cash flows associated with our derivative instruments, see Item 3. Quantitative and Qualitative Disclosures About Market Risk—Projected Cash Flows Associated with Derivative Instruments below. For information regarding our derivative instruments, including the net cash paid or received in connection with these instruments during the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, see note 5 to our condensed consolidated financial statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information in this section should be read in conjunction with the more complete discussion that appears under Quantitative and Qualitative Disclosures About Market Risk in our 20202021 Form 10-K. The following discussion updates selected numerical information to September 30, 2021.
We are exposed to market risk in the normal course of our business operations due to our investments in various countries and ongoing investing and financing activities. Market risk refers to the risk of loss arising from adverse changes in foreign currency exchange rates, interest rates and stock prices. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. As further described below, we have established policies, procedures and processes governing our management of market risks and the use of derivative instruments to manage our exposure to such risks.
Cash and Investments
We invest our cash in highly liquid instruments that meet high credit quality standards. We are exposed to exchange rate risk to the extent that the denominations of our cash and cash equivalent balances, revolving lines of credit and other short-term sources of liquidity do not correspond to the denominations of Liberty Latin America’s short-term liquidity requirements. In order to mitigate this risk, we actively manage the denominations of our cash balances in consideration of Liberty Latin America’s forecasted liquidity requirements.
Foreign Currency Rates
The relationship between the (i) CLP, JMD and CRC and (ii) the U.S. dollar, which is our reporting currency, is shown below, per one U.S. dollar:
| | | September 30,
2021 | | December 31, 2020 | | March 31,
2022 | | December 31, 2021 |
| Spot rates: | Spot rates: | | | | Spot rates: | | | |
| CLP | CLP | 810.28 | | | 711.78 | | CLP | 785.26 | | | 852.00 | |
| JMD | JMD | 147.84 | | | 142.41 | | JMD | 153.48 | | | 153.96 | |
| CRC | CRC | 627.22 | | | 613.19 | | CRC | 666.78 | | | 642.21 | |
| | | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | | 2022 | | 2021 |
| Average rates: | Average rates: | | | | | | | | Average rates: | | | | |
| CLP | CLP | 773.18 | | | 780.71 | | | 737.78 | | | 802.36 | | CLP | | 808.55 | | | 725.54 | |
| JMD | JMD | 151.86 | | | 145.52 | | | 149.69 | | | 141.08 | | JMD | | 154.86 | | | 148.35 | |
| CRC | CRC | 622.53 | | | 592.55 | | | 617.19 | | | 578.79 | | CRC | | 644.94 | | | 612.38 | |
Interest Rate Risks
In general, we seek to enter into derivative instruments to protect against increases in the interest rates on our variable-rate debt. Accordingly, we have entered into various derivative transactions to reduce exposure to increases in interest rates. We use interest rate derivative contracts to exchange, at specified intervals, the difference between fixed and variable interest rates calculated by reference to an agreed-upon notional principal amount. At September 30, 2021,March 31, 2022, we paid a fixed or capped rate of interest on 97% of our total debt, which includes the impact of our interest rate derivative contracts. The final maturity dates of our various portfolios of interest rate derivative instruments generally fall short ofmatch the respective maturities of the underlying variable-rate debt. In this regard, we use judgment to determine the appropriate maturity dates of our portfolios of interest rate derivative instruments, taking into account the relative costs and benefits of different maturity profiles in light of current and expected future market conditions, liquidity issues and other factors. For additional information concerning the impacts of these interest rate derivative instruments, see note 5 to our condensed consolidated financial statements.
Sensitivity Information
Information concerning the sensitivity of the fair value of certain of our more significant derivative instruments to changes in market conditions is set forth below. The potential changes in fair value set forth below do not include any amounts associated with the remeasurement of the derivative asset or liability into the applicable functional currency. For additional information, see notes 5 and 6 to our condensed consolidated financial statements.
C&W Cross-currency and Interest Rate Derivative Contracts
Holding all other factors constant, at September 30, 2021,March 31, 2022, an instantaneous increase (decrease) in the relevant base rate of 100 basis points (1.0%) would have increased (decreased) the aggregate fair value of the C&W cross-currency and interest rate derivative contracts by approximately $170$115 million ($162115 million).
Liberty Puerto Rico Interest Rate Derivative Contracts
Holding all other factors constant, at September 30, 2021,March 31, 2022, an instantaneous increase (decrease) in the relevant base rate of 100 basis points (1.0%) would have increased (decreased) the aggregate fair value of the Liberty Puerto Rico interest rate derivative contracts by approximately $47$32 million ($3727 million).
Projected Cash Flows Associated with Derivative Instruments
The following table provides information regarding the projected cash flows associated with our derivative instruments. The U.S. dollar equivalents presented below are based on interest rates and exchange rates that were in effect as of September 30, 2021.March 31, 2022. These amounts are presented for illustrative purposes only and will likely differ from the actual cash payments required in future periods. For additional information regarding our derivative instruments, including our counterparty credit risk, see note 5 to our condensed consolidated financial statements.
| | | | Payments (receipts) due during: | | Total | | Payments (receipts) due during: | | Total |
| | | Remainder of 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | Thereafter | | | Remainder of 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Thereafter | |
| | | in millions | | in millions |
| Projected derivative cash payments (receipts), net (a): | Projected derivative cash payments (receipts), net (a): | | Projected derivative cash payments (receipts), net (a): | |
| Interest-related (b) | Interest-related (b) | $ | 9.2 | | | $ | 42.6 | | | $ | 24.9 | | | $ | 23.6 | | | $ | 23.3 | | | $ | 22.9 | | | $ | 107.5 | | | $ | 254.0 | | Interest-related (b) | $ | 31.1 | | | $ | 57.3 | | | $ | 43.5 | | | $ | 43.1 | | | $ | 42.7 | | | $ | 41.5 | | | $ | 32.3 | | | $ | 291.5 | |
| Principal-related (c) | Principal-related (c) | — | | | — | | | — | | | — | | | — | | | (4.6) | | | — | | | (4.6) | | Principal-related (c) | — | | | — | | | — | | | — | | | (3.9) | | | — | | | — | | | (3.9) | |
| Other (d) | | Other (d) | (5.9) | | | — | | | — | | | — | | | — | | | — | | | — | | | (5.9) | |
| Total | Total | $ | 9.2 | | | $ | 42.6 | | | $ | 24.9 | | | $ | 23.6 | | | $ | 23.3 | | | $ | 18.3 | | | $ | 107.5 | | | $ | 249.4 | | Total | $ | 25.2 | | | $ | 57.3 | | | $ | 43.5 | | | $ | 43.1 | | | $ | 38.8 | | | $ | 41.5 | | | $ | 32.3 | | | $ | 281.7 | |
(a)Amounts do not include projected cash flows related to derivatives of the Chile JV Entities, which comprise (i) total interest-related payments of $119$123 million, (ii) total principal-related receiptspayments of $26$19 million and (iii) total foreign currency-related receipts of $18$5 million. For information regarding the pending formation of the Chile JV, see note 8 to our condensed consolidated financial statements.
(b)Includes the interest-related cash flows of our cross-currency and interest rate derivative contracts.
(c)Includes the principal-related cash flows of our cross-currency derivative contract.
(d)Includes amounts related to our foreign currency forward contracts.
Item 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer (the Executives)Executives), as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Executives recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply judgment in evaluating the cost-benefit relationship of possible controls and objectives.
As disclosed in our Annual Report on Form 10-K for our fiscal year ended December 31, 2020,2021, we identified material weaknesses in our internal control over financial reporting. The material weaknesses will not be considered remediated until the applicable new or enhanced controls operate for a sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively. Our management, with the participation of the Executives, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021.March 31, 2022. As remediation is not completed, the Executives concluded that our disclosure controls and procedures continue to be ineffective as of September 30, 2021.March 31, 2022.
Management’s Remediation Plans
Management, with oversight from the Audit Committee of the Board of Directors, is continuing to implement the remediation plans as disclosed in our Annual Report on Form 10-K for our fiscal year ended December 31, 2020.2021. We believe that these actions and the improvements we expect to achieve, when fully implemented, will strengthen our internal control over financial reporting and remediate the material weaknesses identified.
Changes in Internal Control over Financial Reporting
Except as listed below, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
During the quarter, changes in our internal control over financial reporting include that we:
•designed and implemented additional manual procedures and controls to enhance our internal control process through a combination of preventative and detective controls,
•hired additional accounting, finance, and technology and information resources to design, implement, perform and perform internal controls over financial reporting,
•hired third-party resources to assist in training and coaching existing personnel regarding control design and execution, designing and implementing new controls, and monitoringmonitor the execution of internal controls over financial reporting, including general IT controls,
•hired additional technologyimplemented the central enterprise resource planning software to standardize and information compliance staff to design, implement,enhance the related processes and monitor the executioncontrols for another one of general IT controls, including the system development lifecycle process,our segments,
•enhanced information and communication regarding the importance of strong internal controls, the ongoing remedial efforts, and continued improvement; and,
•created templates and control guidance to facilitate compliance with control activities and held trainings to reinforce control concepts and responsibilities for control performers.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
From time to time, our subsidiaries and affiliates have become involved in litigation relating to claims arising out of their operations in the normal course of business. For additional information, see note 1817 to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q.
Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Issuer Purchases of Equity Securities
On March 17,16, 2020, we announced that our Directors authorizedapproved the 2020 Share Repurchase Program, which authorizesauthorized us to repurchase from time to time up to $100 million of our Class A common shares and/or Class C common shares asthrough March 2022, subject to certain limitations and conditions. On February 22, 2022, our Directors approved the case may be, over two years. The2022 Share Repurchase Program does not obligateProgram. This program authorizes us to repurchase anyfrom time to time up to an additional $200 million of our Class A common shares and/or Class C common shares. Under the Share Repurchase Program, we may repurchase our common shares from time to timethrough December 2024 in open market purchases at prevailing market prices, in privately negotiated transactions, in block trades, derivative transactions and/or through other legally permissible means.
The following table sets forth information concerning our company’s purchase of its own equity securities during the three months ended September 30, 2021:March 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Total number of shares purchased | | Average price
paid per share (a) | | Total number of
shares purchased as part of publicly
announced plans
or programs | | Approximate
dollar value of
shares that may
yet be purchased
under the plans or programs |
| | | | | | | | | |
| July 1, 2021 through July 31, 2021: | | | | | | | | |
| Class A | | 514,300 | | | $ | 13.79 | | | 514,300 | | | (b) |
| Class C | | — | | | $ | — | | | — | | | |
| August 1, 2021 through August 31, 2021: | | | | | | | | |
| Class A | | 580,600 | | | $ | 13.77 | | | 580,600 | | | (b) |
| Class C | | — | | | $ | — | | | — | | | |
| September 1, 2021 through September 30, 2021: | | | | | | | | |
| Class A | | 368,400 | | | $ | 13.40 | | | 368,400 | | | (b) |
| Class C | | — | | | $ | — | | | — | | | |
| Total — July 1, 2021 through September 30, 2021: | | | | | | | | |
| Class A | | 1,463,300 | | | $ | 13.68 | | | 1,463,300 | | | (b) |
| Class C | | — | | | $ | — | | | — | | | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Total number of shares purchased | | Average price
paid per share (a) | | Total number of
shares purchased as part of publicly
announced plans
or programs | | Approximate
dollar value of
shares that may
yet be purchased
under the plans or programs |
| | | | | | | | | |
| January 1, 2022 through January 31, 2022: | | | | | | | | |
| Class A | | 758,800 | | | $ | 11.19 | | | 758,800 | | | (b) |
| Class C | | 463,000 | | | $ | 10.89 | | | 463,000 | | | |
| February 1, 2022 through February 28, 2022: | | | | | | | | |
| Class A | | 800,500 | | | $ | 11.05 | | | 800,500 | | | (b) |
| Class C | | 571,800 | | | $ | 10.68 | | | 571,800 | | | |
| March 1, 2022 through March 31, 2022: | | | | | | | | |
| Class A | | 325,200 | | | $ | 9.78 | | | 325,200 | | | (b) |
| Class C | | 2,489,200 | | | $ | 9.78 | | | 2,489,200 | | | |
| Total – January 1, 2022 through March 31, 2022: | | | | | | | | |
| Class A | | 1,884,500 | | | $ | 10.89 | | | 1,884,500 | | | (b) |
| Class C | | 3,524,000 | | | $ | 10.07 | | | 3,524,000 | | | |
| | | | | | | | | |
(a)Average price paid per share includes direct acquisition costs.
(b)At September 30, 2021, March 31, 2022,the remaining amount authorized for repurchases of Liberty Latin America Sharesunder the 2022 Share Repurchase Program was $61$170 million.
Item 6. EXHIBITS
Listed below are the exhibits filed as part of this Quarterly Report on Form 10-Q (according to the number assigned to them in Item 601 of Regulation S-K):
| | | | | |
2.110.1 | |
2.2 | |
2.3 | Master Transaction Agreement, dated September 29, 2021, by and among Liberty Latin America, Ltd., LLA UK Holdco Limited Sercotel, S.A. de C.V., Controladora de Servicios de Telecomunicaciones, S.A. de C.V., América Móvil, S.A.B. de C.V. and Claro Chile, S.A. (incorporated by reference to Exhibit 2.1 to Liberty Latin America’s Current Report on Form 8-K filed on October 5, 2021 (File No. 001-38335)).**Rocio Lorenzo.* |
| 31.1 | |
| 31.2 | |
| 32 | |
| 101.SCH | XBRL Inline Taxonomy Extension Schema Document.* |
| 101.CAL | XBRL Inline Taxonomy Extension Calculation Linkbase Document.* |
| 101.DEF | XBRL Inline Taxonomy Extension Definition Linkbase.* |
| 101.LAB | XBRL Inline Taxonomy Extension Label Linkbase Document.* |
| 101.PRE | XBRL Inline Taxonomy Extension Presentation Linkbase Document.* |
| 104 | Cover Page Interactive Data File.* (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith
** Furnished herewith
***Schedules and exhibits to this document have been omitted pursuant to Item 601(a)(5) of Regulation S-K but will be provided to the U.S. Securities and Exchange Commission or its staff upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | |
| | | | LIBERTY LATIN AMERICA LTD. |
| | |
| Dated: | November 2, 2021May 4, 2022 | | /s/ BALAN NAIR |
| | | Balan Nair President and Chief Executive Officer |
| | | |
| Dated: | November 2, 2021May 4, 2022 | | /s/ CHRISTOPHER NOYES |
| | | Christopher Noyes Senior Vice President and Chief Financial Officer |
