Liberty Latin America Ltd - Earnings Call - Q3 2021

Transcript

Speaker 0

Good morning, ladies and gentlemen, and thank you for standing by. Today's call is being recorded. I'll now turn the call over to Vinod Karrupp, Interim Chief Technology Officer of Liberty Latin America.

Speaker 1

Good morning, and welcome to Liberty Latin America's Third Quarter twenty twenty one Investor Call. At this time, all participants are in listen only mode. Today's formal presentation materials can be found under the Investors section of Liberty Latin America's website at www.lla.com. Following today's formal presentation, instructions will be given for a question and answer session. As a reminder, this call is being recorded and will be available under the Investors section of our website.

Today's remarks may include forward looking statements, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical fact. Actual results may differ materially from those expressed or implied by these statements. For more information, please refer to the risk factors discussed in Liberty Latin America's most recently filed annual report on Form 10 ks and the most recent Form eight ks filed with the SEC, along with the associated press release. Liberty Latin America disclaims any obligation to update any forward looking statements or information to reflect any change in its expectations or in the conditions on which such statements or information is based. In addition, on this call, we will refer to certain non GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation, which is accessible under the Investors section of our website.

I would now like to turn this call over to our CEO, Mr. Balan Maher.

Speaker 2

Thank you, Vinod, and welcome everybody to Liberty Latin America's results presentation for the third quarter of twenty twenty one. I'll begin with our group highlights and operating results before handing over to Chris Noyes, our CFO, who will provide a review of the company's financial performance. After that, we will get straight to your questions. As always, I'm joined by my executive team from across the region. I'll get them involved as needed during Q and A following our prepared remarks.

As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com. Starting on Slide four, and our highlights. We delivered 84,000 fixed RGU adds in Q3, representing our strongest quarter of the year so far. This continued our momentum from the first half and we've now added nearly a quarter of a million RGUs year to date. C and W Panama and C and W Caribbean and networks drove the majority of additions.

In mobile, we had another strong quarter, adding 74,000 new subscribers, but half of which were postpaid. We also saw good initial contributions from our mobile operations in Costa Rica, which we acquired from Telefonica on August 9. As we've previously highlighted, new build and upgrade plans are a core element of our growth strategy and we continue to build aggressively in the third quarter, taking our year to date homes added or upgraded to approximately $600,000 About 99% of these adds have been through fiber to the home technology. Free cash flow is our key focus and we delivered a strong performance in the quarter with year to date adjusted free cash flow now at $149,000,000 to the September. We are clearly on track to exceed our guidance of $200,000,000 this year And Chris will cover this further in his section.

Finally, we have made some important inorganic announcements with the acquisition of America Movil's Panama operations and a fifty-fifty joint venture with America Movil in Chile, both of which are expected to close next year. These transactions will enable us to improve our networks and customer proposition, including delivering converged solutions in Chile, whilst also generating significant synergies and value for our stakeholders. Turning to Slide five and our fixed consumer business. On the left of the slide, we present our quarterly RGU ads since Q1 twenty twenty. This shows the initial impacts of COVID-nineteen and our recovery since then with consistent additions through this year culminating Q3 strong performance.

In terms of our markets, C and W Panama was the main driver for the group's third quarter results, adding 30,000 RGUs, which was more than Panama had contributed in the entire first half of twenty twenty one. We have invested in our networks and products in Panama and are pleased to see operating results coming true. C and W Caribbean and Networks also delivered another strong quarter with 25,000 net adds led by Jamaica, which has now added 100,000 RGUs over the last twelve months. Puerto Rico and Costa Rica continued to grow their subscriber basis in Q3 led by broadband RGUs, which contributed over two thirds of their combined total ads. Chile remains intensely competitive.

However, we reported another quarter of stable subscriber numbers and are excited about the potential for a joint venture with America Movil, which I will cover later in the presentation. On the right of the slide, we have shown our new build and upgrade progress over the same period. We remain committed to investing in our networks and product offerings to deliver greater access to high speed connectivity solutions for our customers and have already built or upgraded 50% more homes in the 2021 than we did through all of 2020. Importantly, nearly all of our bills is now fiber to the home and we continue to plan on deploying this technology for the rest of our bills. Moving to Slide six and our mobile performance.

Again, we have presented quarterly evolutions from the beginning of 2020. In the upper part of the slide, the chart shows a significant impact of mobility restrictions on our operations in the 2020 and our subsequent recovery. In Q3, we included for the first time the mobile operations, which we acquired from Telefonica in Costa Rica. We are in the early phases of integrating our businesses in Costa Rica and are pleased with what we have seen today from what is now our largest mobile operations in terms of subscribers. In the period during the quarter under our ownership, Costa Rica contributed 37,000 mobile subscribers.

Of our other markets, C and W Caribbean and Networks and C and W Panama were again the largest contributors to the group's results delivering 24,000 net adds each. In aggregate, we added 74,000 mobile subscribers in the quarter with a blended ARPU of 15 across our base. On the bottom of the slide, we present our postpaid adds over the same period. We have been successful in building momentum in postpaid through targeted promotions, including our nascent converged offerings. Costa Rica and Puerto Rico are our largest postpaid markets and they led the group in Q3 with 55,000 ads respectively.

C and W Caribbean and Networks and C and W Panama have also been steadily growing their postpaid basis, adding 16,000 postpaid subscribers in aggregate during the quarter. Next to Slide seven, and our B2B operations. In the bar charts, we break out the performance for C and W Caribbean and Networks, C and W Panama and Liberty Puerto Rico over the past two years. These segments include the majority of our B2B operations, representing over 95% of total B2B revenue in the third quarter. On the far left, we show C and W Caribbean and Networks revenue with the subsea components split out.

The subsea business has been consistent throughout the period and slightly higher in the latest quarter. This speaks to its resilience, which is further reinforced by its U. S. Dollar rating. The non subsea B2B operations in CNW Caribbean and Networks were impacted more severely by COVID-nineteen, but are steadily recovering and off their lows.

Next to C and W Panama, our mass mobile in the center. Panama was one of our most severely impacted markets in 2020 and early twenty twenty one, but the segment is now back to pre COVID revenue levels and we are looking for further progression from here. Finally, Delivery Puerto Rico. This chart shows the scale of B2B operations we acquired in the AT and T transaction as the Q3 twenty twenty one figure includes B2B operations we acquired net to the B2B asset we disposed. With our converged propositions, we believe this can be a growth driver for Port thirty two.

On the right of the slide, we have broken out our B2B customer segments and provided an indication of their respective sizes. Finally, to Slide eight and a review of the inorganic progress we have made. Before going through some of the details, I want to share how excited we are about these transactions. We've always said the best M and A are in country transactions, where they solve for product gaps or existing offerings, clear generation of synergies, create scale to strengthen our market positioning and propositions, and most importantly, ability to drive meaningful free cash flow growth. Moving to a bit more detail, on the left of the slide, we've outlined the rationale for our announced fiftyfifty joint venture with America Movil in Chile.

Through this transaction, we will combine a strong fixed operator with a strong mobile operator. This new company will have scale to provide all communications needs to both consumers and businesses. We plan on investing in more fiber to the home, increase five gs coverage, strengthen our B2B propositions, increase our digital channels and possibly partnering with other operators on our networks. The combined business plan to generate significant synergies of over $180,000,000 And we feel that this transaction makes sense for Chile, where the combined company will only be the third largest provider behind Intel and Telefonica, hopefully, a catalyst for more consolidation in that market. We expect the transaction will close in the second half of twenty twenty two.

And have also noted some key elements of the structure on the slide. Turning to the right of the slide, we also announced the acquisition of America Movil's Panama operations. This transaction will consolidate the market from four to three players. This will create a healthy situation for all three remaining players. We will also bring scale to CWP on both consumer and B2B propositions and distribution.

It improves network coverage and customer experience. And as with the Chile transaction, we expect to generate significant synergies. Note that this acquisition will be funded at the asset level in Panama. In addition to these announced transactions, we were pleased to complete the acquisition of Telefonica Costa Rica operations in August. Integrating this mobile business with our fixed operations at Cabletica will enable us to create compelling product offerings for our customers as well as drive synergy benefits.

We are also making progress in the integration of our Puerto Rico operations where we are one year into a three year plan and recently completed an important milestone as we rebranded fixed and mobile operations to Liberty. Overall, as we approach the year end, we are focused on delivering our guidance targets and establishing a platform for sustained organic growth across our operations. We are also working diligently to integrate operations we have acquired as well as to close the transactions announced. We remain confident that together these actions will create additional value and position us to deliver adjusted free cash flow growth in the coming years. With that, I'll pass you over to Chris Noyes, our Chief Financial Officer, who will talk you through our financial performance before we take your questions.

Chris?

Speaker 3

Thanks, Balan. One housekeeping item to start, we closed the Telefonica Costa Rica acquisition on August 9. So their results are only in for a portion of this quarter. Our reported revenue increased by 34% or about 300,000,000 to reach revenue of $1,190,000,000 in Q3, helped in large part by the positive impact from acquisitions. On a rebased basis, our revenue grew 3%, led by strong year over year performances in Costa Rica and Panama.

From a product perspective, our residential mobile business picked up steam and delivered rebased growth of 6% in the quarter, while residential fixed and B2B also grew. On a year to date basis, rebased revenue maintained a consistent 4% growth rate. Turning to adjusted OIBDA. We posted $446,000,000 in Q3, reflecting reported growth of 24% and flat rebased growth, consistent with our Q2 statement regarding lower expected rebased rates in the second half of the year. Cost increases varied across certain markets.

But in aggregate, we experienced a combination of higher direct costs, including programming and roaming and higher operating costs. Similar to revenue, our year to date adjusted OIBDA rebased growth was 4%. Slide 11 summarizes our revenue and adjusted OIBDA performance by operating segment for Q3, and the bottom of the slide displays year over year adjusted OIBDA results. Beginning with C and W Caribbean and Networks, we reported $435,000,000 of revenue or 4% rebased growth, led by double digit revenue growth in Jamaica. Mobile revenue performance was the largest contributor to our top line progression with rebased growth of 9%, reflecting modest recovery from COVID and early success from our focus on converged offerings.

Additionally, we experienced year over year rebased revenue growth of 3% in both B2B and fixed residential. Adjusted OIBDA was $182,000,000 or up 3% on a rebased basis in the quarter as both direct and operating costs increased year over year, caused in part by higher activity. Next, Cable and Wireless Panama. Q3 revenue and adjusted OIBDA grew 911% on a rebased basis, respectively, delivering revenue of $129,000,000 and adjusted OIBDA of 48,000,000 Momentum is building in Panama, led by rebased revenue growth of 15% in B2B and 10% residential fixed, while residential mobile posted modest growth over Q3 twenty twenty. On residential fixed, we have added 70,000 RGUs in the last twelve months, with roughly 40% of these in the current quarter, which should help propel growth into the fourth quarter.

Highlighted in the middle of the slide is Liberty Puerto Rico. We reported revenue of $359,000,000 and adjusted OIBDA of $142,000,000 representing modest rebased growth in Q3 of 2% revenue and 3% in adjusted OIBDA. In terms of revenue, our legacy fixed operations once again grew double digit year over year, while Liberty Mobile declined as subscription revenue growth was offset by lower equipment, B2B and roaming revenue. Adjusted OIBDA was impacted by higher costs, principally in the areas of roaming, programming and labor on a year over year basis. The sequential decline in adjusted OIBDA from Q2 was due in large part to lower net roaming and greater losses from equipment sales.

We also incurred integration costs of $2,000,000 which we assume will step up considerably in the fourth quarter. Turning to VTR. Q3 revenue of $193,000,000 and adjusted OIBDA of $65,000,000 reflect rebased declines of 518%, respectively. Sequentially, our results in U. S.

Dollar terms reflect an average depreciation of the Chilean peso by approximately 8% in Q3 as compared to Q2. Consistent with prior quarters, our year over year rebased revenue decline was largely due to volume losses and ARPU declines in broadband. Compared to last year, adjusted OIBDA has compressed faster than revenue due in part to much higher programming costs relating to the return of live soccer matches. One positive in the quarter was that VTR's adjusted OIBDA in Chilean pesos was marginally positive to the second quarter results. Ending with Costa Rica.

Including the mobile assets for about fifty days of the quarter, we generated revenue of $77,000,000 of rebased revenue growth of 11%. This top line performance was driven in large part by a combination of mobile and broadband growth, reflecting the increases in the subscriber basis over the last year. We reported adjusted OIBDA of $24,000,000 reflecting rebased growth of 13%. In the quarter, the Telefonica assets contributed $41,000,000 of revenue and $11,000,000 of adjusted OIBDA. Integration activity should begin to ramp in Q4.

On Slide 12, we reported P and E additions of two thirty two million dollars for Q3 and $599,000,000 year to date. Our spend equates to 20% of revenue for Q3 and 17% of revenue for the nine month period. The increase in quarterly spend was due in part to the significant expansion in our new build activity, which is up threefold in terms of homes passed and or upgraded as compared to last year. We will continue to have elevated capital spending in the fourth quarter, reflecting our investments in network, subscriber growth and integration, and are on track to deliver full year P and E additions of approximately 18% of revenue. With respect to adjusted free cash flow, we delivered our fourth consecutive quarter of positive free cash flow with $56,000,000 in Q3, bringing our total to roughly $150,000,000 for the nine months.

We are currently tracking to exceed our $200,000,000 guidance figure for 2021. On Slide 13, we have broken down our consolidated results by revenue. Roughly 65% of our reported revenue at Q3 is U. S. Dollar, U.

S. Dollar linked and or pegged. Importantly, Puerto Rico and Panama account for 40% of our total revenue, and that will increase post the Claro acquisition in Panama. Additionally, post our JV in Chile, overall value will still be impacted by the trajectory of the Chilean peso theoretically, but our consolidated reported results will be U. S.

Dollar oriented to over 75%. In comparison to other publicly traded operators in the region, this U. S. Dollar mix, we believe, is a key positive differentiator. Moving to our financing metrics on Slide 14.

During Q3, we funded the acquisition of Telefonica in Costa Rica with local debt borrowings and cash from LLA and our 20% partner. And in early October, we completed a roughly $600,000,000 eight year refinancing in C and W at a fully swap rate of about 4.4%. This results in over $14,000,000 of annual free cash flow savings beginning in 2022. At September 30, including VTR, which is held as an asset for sale on our balance sheet, we had $9,200,000,000 of total debt, dollars 1,100,000,000.0 of cash and $1,200,000,000 of availability under our revolving credit lines. We had gross leverage of five times and net leverage of 4.4 times, inclusive of ETR.

Our ratios will fall slightly after adjusting for a full quarter impact of Telefonica Costa Rica. Our maturity schedule in the upper right remains long dated. And finally, an important development that we discussed in Q2 is that we restarted our share buyback. We repurchased $10,000,000 in Q2. We doubled that in Q3 to $20,000,000 and have definitely continued into Q4.

Through Q3, we have $60,000,000 remaining under our current repurchase authorization, which expires next spring. Turning to Slide 15. As we have highlighted today, we've been very active in the quarter. We are executing on our plan to drive future value to both customers and shareholders, driving subscriber revenue and adjusted OIBDA growth year to date, expanding our network investments and making strategic non organic moves, which we believe are highly accretive and which strengthen our product offering for our customers. We are on track to deliver our 2021 guidance targets on new builds, P and E additions and most importantly, cash flow, which is a key metric for us and how we run our business.

Given the share weakness we have seen over the last few months and our view on our free cash flow trajectory and relatively quiet near term acquisition pipeline, we have ramped up our buyback activity, capitalizing on what we believe is a valuation disconnect and a high capital return opportunity. In Q4, we are focusing on customer acquisition, new build, digital implementation and integration activities, which should set the stage for our 2022 performance. With that, operator, we are ready to take questions.

Speaker 2

Thank

Speaker 0

And we will take our first question from Jeffrey Vogelchuk with Pivotal Research Group. Please go ahead.

Speaker 4

Good morning. I had a couple of questions on Puerto Rico. I was hoping you could provide more color on the wireless revenue decline. Is it fair to say that's mostly COVID related? And then if you could give any color on when you guys intend on rolling out converged offer to consumers in Puerto Rico that would be helpful.

I had one follow-up.

Speaker 5

Good morning, Jeff. Let me maybe address that a bit and I'll ask Najee to jump in here. The wireless business in Puerto Rico is actually doing really well. We actually added postpaid subscribers in the quarter. We did have some headwinds and but it's not really COVID related.

It's bouncing around a bit on roaming, some of the equipment sales moved off a bit, I'd be quite bullish on that front. And on the converged side, we've already started our converged offerings and but we're going to improve even more so once the systems cut over to outside. Najee, do you want to add on to that?

Speaker 6

Yes, sure, Ben. Good morning, Jeffrey. Yes, I mean to echo Balan's point, us, the fundamentals are very strong. If you look at service revenue both sequentially and year over year, they are it's growing. There's some volatility a bit on the roaming as Val discussed as well as the coupon revenue.

As you know as well, you know, the the iPhone was launched, you know, late September, and, you know, the peak was was in October. People usually hold their purchase until the the new phone come in. So they received the seasonality. And as you know, in most cases, it is also a a negative contributor as well when it comes to corporate revenue. On the roaming, you know, I think was expected.

There is seasonality, and more people are traveling as well, which in some case add expense, in some case reduces revenue as well. For the convergence, really excited about the way this is unfolding. As Bana had mentioned, we did converge our brand on September 28. Feedback has been really positive. And we our our not only our offer are converge are converging now, but our sales channels are converging.

So customers that are walking into our retail stores today are able to purchase both fixed and mobile. And initial results are really positive. And again, we're just literally, you know, four weeks into into this. So really excited and, you know, very optimistic about the future from that perspective.

Speaker 4

Thanks. And then is there any update on your Subsea assets? You were thinking about selling a portion of that. I think you're going to let us know in fourth quarter. Is that not happening?

You're still thinking about it? Any update would be great.

Speaker 5

Well, Jeff, you can clearly see that business is a very good strong business, very stable and predictable cash flow. We've been thinking about some of the parts of it and giving better and more clear line of sight to it. I expect that in our February call, we'll give you a very clear view on what our plans are on that asset.

Speaker 4

Great. Thank you very much. Sure.

Speaker 0

And up next, we'll take a question from Michael Rollins with Citi. Please go ahead.

Speaker 3

Thanks and good morning. I'm curious if you could discuss when you have fixed and mobile convergence in the market, what are the typical revenue or margin advantages over not having that level of convergence?

Speaker 5

Sure. There's a few drivers for the convergence. Clearly, the bundle gives a better ARPC for the customer on the average revenue per customer. Secondly, it improves the churn as well. Thirdly, especially in our case, where we have a lot of prepaid customers, FMC, this convergence actually moves a lot of our unpredictable prepaid customers to a postpaid customer or even in some cases, even kind of a hybrid postpaid.

But the goal really is to get the customer to stick with us longer, create value through the bundle, have them see or actually experience a much better service from us and theoretically also a better value for them. And it is working and it's working very strongly. As Najee pointed out in Puerto Rico, we started that and we're seeing not only green shoots actual growth. I mean, you look at our FICC business, one of our best performances last quarter driven a lot by FMC as well. Costa Rica, we just acquired the Telefonica asset and it is working now already with our Tabletica business and Telefonica's business and that combination, we are launching some very innovative products.

In Cable and Wireless, our General Manager there has introduced really innovative FMC products and we are seeing the success as well moving the prepaid to postpaid. That's why we're driving it. And clearly margin improves as well as predictability of that cash flow.

Speaker 2

Thanks.

Speaker 0

All right. And up next we'll hear from James Ratcliffe with Evercore ISI. Please go ahead.

Speaker 7

Good morning. Thanks for the question. Two if I could. First of all on the margin front I know there's a lot of noise in the data with COVID plus M and A and the like. But can you help us look through that to what the underlying margin trends look like, particularly at Cable and Wireless?

And how much more room do you have to run-in your cost reduction work there? And secondly, fixed telephony continues to be surprisingly strong. Can you talk about what you're doing with that product? What's the impact in terms of ARPU and churn and what the strategy around it is? Thanks.

Speaker 5

So on the cost margins, Cable Wireless and my General Manager there Inge is on the call as well. I'll ask her to maybe provide some thoughts on the cost reductions that she's taken on. We think there's some there is going to be margin expansion there on two fronts. One, on the OpEx side. We've actually also improved on the COGS side.

And then clearly, as time goes on, even on the CapEx as well, we expect a few more points in the combination of all those three cost segments. And Inger has done some really good work both at the center as well as in the islands in driving some of the cost reduction. So maybe Inge if you want to comment on that?

Speaker 8

Yes. Good morning, Bala. Good morning, James. Indeed. So we really look at it line for line, business line for business line.

We really work through every single aspect of whether it's the OpEx side or whether it's the COGS side and really looking for the return on investment. And we've really started that work in the last two years and next year we will continue and also in the next quarter we will really do continue to drive that piece of that. Like Daryl said, both in markets and at the center and there's clearly some room to improve that side.

Speaker 5

Thanks, Inge. And then on your second question on fixed telephony, this is an interesting thing. I mean, clearly this product is not a super growth product, but we found still a way where customers through the bundle kind of an innovative pricing proposition, getting our existing customers to just to add on voice to the service. You can imagine the gross margin on this is like close to 100%. And so we've just taken the advantage to drive more and more of it.

And it's working in some areas. We're not counting on this as a growth drive for our business. We're counting on this as in our LRP as a driver. But when you get it, you take it. We saw an opportunity and we put our salespeople on it and we were able to put up some good numbers.

Speaker 7

Great. Thank you.

Speaker 0

And up next, we'll hear from Sumit Dada with New Street Research. Please go ahead.

Speaker 9

Hi, guys. Yes. Thanks for the presentation. A couple of questions, please. One just on Chile, please.

You talked about the subspace kind of stabilizing a little bit, but the broadband adds are particularly weak, think. So we've seen accelerating broadband losses through this year. So I just wondered how you thought about the momentum in that business. And again, as a kind of joined question, how do you see the deal you're doing in Chile kind of helping on the fixed side in particular? And I guess also, is there anything you can do before that deal closes to help the broadband business?

So that's one question. Please maybe I'll wait for the answer and then just go with another one.

Speaker 5

Sure. And I'll ask Vivek to jump in here in a bit as well. The broadband business there, it's been all over the map. Our gross adds on broadband are really good. There's some leakage clearly and that's why the net adds went off.

But there's three things that we're doing. One, we're improving our retention on broadband and we're getting a lot more creative on that as well. Two, as

Speaker 0

you

Speaker 5

can imagine, we are repricing a product and you can see that in our EBITDA. And that has also slowed a lot of the churn part of broadband. And third, we are going to re vector some of our sales team, not some, a lot of our sales team to now focus just specifically on broadband. So you'll see some numbers turning on there, but I'll tell you, are adding gross adds are coming in still strong on broadband. It's just the churn level.

So we are trying to address the next stage, the churn part of broadband proposition. Vivek, would you mind adding a bit more to that?

Speaker 10

Yes. Thanks, Balan. Thanks, Sumit, for the question. Yes, I think as Balan said, really focusing on the churn side of the equation, which continues to be challenged with the competitive intensity here. As our competitors continue to expand their footprint, you know, our our churn improvement initiatives, we have seen reductions in technical services, calls, truck rolls, etcetera.

So those should it does have a lagging effect, so that we should see the upside of churn in a while. But we've been having some record months on gross adds. I think, given the seasonality, we've seen, like, probably, the best gross adds you've done in the last few years on on the broadband side. Of course, fueled by some of the new build we have added into the market. So, you know, I I would say the competitive intensity continues to be difficult in the marketplace, which is kind of reflected in the numbers, but the opportunity for continuing to add broadband subscribers is still there.

Speaker 5

Thanks, Vivek.

Speaker 9

Okay. That's great. Thank you very much. Can I follow-up please just with just a quick question for Chris actually on cash flow? I think the integration costs are coming in a little bit lower this year.

Could you just give us a quick update please on as we move into 2022, what will the delta be between integration costs this year and next year and also then synergies? So what would be the movement to free cash flow from the combination of all those things, please?

Speaker 11

Yes. Without I mean, we're obviously still working through our plans for next year and the budget process. In terms of integration as it relates to Puerto Rico, what we've communicated is we expect Q4 integration to be around 10,000,000 So that's a little bit of a step up from where we've been year to date. So that would bring the total to roughly $15,000,000 On the cost side this year, I think as of today, we would expect it to be higher integration costs next year in 2022. A lot of the hard work that Najee and the T and I team are doing around the mobile core and things of that nature happen during the year next year.

So I'd expect a step up there. I think CapEx, we continue to spend CapEx on integration and that will stay pretty constant I think in integration land next year as well. We'll have more detail on some of the synergies and views as we kind of finish the outlook for Puerto Rico when we report in February.

Speaker 9

Okay, great. Thanks.

Speaker 0

And we'll take a follow-up question from Jeffrey Voltichek with Pivotal Research Group. Please go ahead.

Speaker 4

Thanks for letting me ask a follow-up. I had a couple on Chile and, this VTR Claro deal, which given how competitive it's getting looks, particularly smart, transaction. I guess, what are the regulatory milestones we should be looking for? The deal is moving towards getting approved. I guess that's the first question.

You're lighting up a lot of two way enabled homes in Chile right now. Is that something you can modify so you aren't sort of overbuilding, your future network or it kind of it's it's already kind of built in? And then third, are there any opportunities post deal to potentially like monetize towers or anything like that, that we're not aware of? Thanks.

Speaker 5

I'll answer question two and three. And John Winter, our General Counsel, is working really hard on the regulatory front. We'll take on one. On the new build, we will continue to aggressively build out fiber to the home. And clearly, Jeff, we can't coordinate with our partner yet.

So we're not coordinating with them and overbuilding them or them overbuilding as we're doing our own thing and until the deal closes. But we're really bullish on the new builds. And I think Chris may have mentioned it, I don't know if he did that we are in a lockbox situation right now after the signing. And so all spending is really JV spending at this point. And so we are just charging ahead.

You had a second question. The third what was the third question again? I forgot.

Speaker 4

Towers. Yeah. Towers.

Speaker 5

Yeah. Towers. Know, not much of the they won't be much towers. I mean, you can imagine Telesites and what they've done with that. We are not expecting any much activity in towers.

Now we do own some towers as well, but there's nothing to write home about. John, you want to talk about the regulatory?

Speaker 12

Yes, sure. Thanks, Balan. So we filed with the regulator at the end of last week, the formal application process. We had already been working with our partner and the regulator on that. That got filed formally.

So that kicks off the Phase I process, which will take about forty five to sixty days, maybe ninety days to get through and answer all their questions. We do expect that it will go on to a Phase two given kind of the competitive environment and everything in Chile. But we feel good about the approval process. We feel good about the advantages this will bring to Chile and the consumers. So eventually we'll get close.

It's just a longer process in Chile and we're still expecting closing in the second half of next year.

Speaker 2

Thanks Jeff. All right.

Speaker 4

Thank you very much.

Speaker 5

Thanks, Jeff.

Speaker 0

And there are no further questions in queue. I'll turn the call back over to Balinair for additional remarks.

Speaker 5

Thank you, operator. And I do want to thank all of you on the call. And just to reiterate, we feel good about the quarter. I mean, strong operational growth, organic growth in RGUs, good numbers on postpaid and fixed. I would also say that our new builds, we are really excited about the new builds and we continue to do that.

We're really leaning into our thesis. The cash flow numbers that Chris talked about clearly meeting and exceeding guidance on that front. And as you pointed out as well Jeff on the call, some really smart M and A decisions and transactions that we executed on this last quarter. So for all those reasons and more, we remain really bullish about this business and in the future for LLA. Thank you so much for all your support and have a great day.

Speaker 0

And this concludes today's call. We thank you again for your participation and you may now disconnect.