Nearly a year after a pair of powerful hurricanes devastated much of its territories, Liberty Latin America is bouncing back with strong subscriber gains across its vast Caribbean, Central American and South American region.
Liberty Latin America , which spun off from its European parent Liberty Global Inc. (Nasdaq: LBTY) at the start of the year, reported picking up 61,100 revenue generating units (RGUs) in the second quarter as it races to wrap up its service restoration efforts in Puerto Rico and other areas hammered by Hurricanes Irma and Maria last September. That RGU increase included a record 44,900 net broadband subscribers and 14,700 net video subs. (See Liberty Latin America Completes Spin-Off From Liberty Global and Hurricanes Hammer Liberty Global Results.)
As a result, Liberty Latin America generated a healthy $922 million in revenue for the spring quarter, up from $910 million in the first quarter. While that figure is still down 2% from the operator's pre-storms "rebased" revenue total a year ago, it came in a bit higher than the Wall Street consensus forecast of $918.7 million.
Nevertheless, investors still appear to be disappointed with the company's results, possibly because of year-to-year declines in the company's operating income and operating cash flow. Operating income fell from $155 million a year ago to $124 million in the spring quarter, while operating cash flow slipped from $361.7 million to $353.4 million. At the close of trading on Friday, the day after it reported its Q2 earnings, the company's share sat at $18.54, down 1.7% on the day, and well below the stock's peak of $23.55 earlier this year.
Speaking on the company's earnings call Thursday, Liberty Latin America CEO Balan Nair focused mainly on the company's hurricane recovery efforts, especially in Puerto Rico. On that island, which is the company's second largest market with nearly 1.1 million homes, he said Liberty Latin America has now restored its HFC network to pass more than 1 million households.
"Over 90% of our subscribers are now billable," Nair said. "And in Q2 we saw the first quarter of organic net additions since last year's hurricanes with quarterly sales ahead of Q2 2017."
Nair added that Liberty has brought 100% of its Puerto Rican fiber-optic nodes back online and is now going door-by-door to restore service throughout the island. In July, he said, the company averaged about 500 service connects a day.
Even with this progress, though, Liberty still has markedly fewer paying customers on the island than it did a year ago, just before Hurricane Maria struck. The company reported having 717,000 RGUs as of Aug. 3, down from a base of 804,000 RGUs before the hurricane.
"Our focus has now moved to small pockets left without service, which is a door-to-door exercise," Nair said, according to a Seeking Alpha transcript of the call. "We are disciplined in our approach and looking to reconnect as many customers as we can as quickly as possible."
Moving on to Chile, Liberty Latin America's largest market with nearly 3.5 million homes passed, the company's VTR unit enjoyed a strong quarter as well. The MSO added 22,000 RGUs in the second quarter, including 26,900 broadband and 8,000 video customers offset by a loss of 13,300 voice subscribers, as the company keeps increasing data speeds. (We'll have more on Liberty Latin America's broadband results in a forthcoming story on our sister site, Broadband World News).
Further, in the company's Cable & Wireless territories, which cover about 2 million homes passed in at least six different Caribbean and Central American markets, Liberty Latin America performed well. In those markets, the MSO netted about 29,000 RGUs, including 10,900 broadband, 9,900 telephony and 7,800 video subscribers.
Liberty also reported that it's continuing to expand the reach of its HFC networks in its VTR and C&W regions, adding another 80,000 new or upgraded homes to its footprint. The company is also rolling out new digital and streaming video services in its various markets, as well as expanding its business services efforts.
— Alan Breznick, Cable/Video Practice Leader, Light Reading