LIBERTY LATIN AMERICA LTD. 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 2020 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 six months endedJune 30, 2021 and 2020. •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 intoU.S. dollars are calculated, and operational data (including subscriber statistics) are presented, as ofJune 30, 2021 . 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; foreign currency risks; interest rate risks; compliance with debt, financial and other covenants; our future projected contractual commitments and cash flows; the Telefónica-Costa Rica Acquisition, including the expected closing date; 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 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 2020 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 and the ability to acquire programming; •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; 37 -------------------------------------------------------------------------------- •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 spectrum or other licenses that we need to offer 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 Telefónica-Costa Rica 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 Telefónica-Costa Rica Acquisition and the AT&T Acquisition; •changes in laws or treaties relating to taxation, or the interpretation thereof, in theU.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; 38 -------------------------------------------------------------------------------- •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-Costa Rica Acquisition; •the effect of any of the identified material weaknesses in our internal control over financial reporting; •piracy, 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 theU.S. Treasury Department's Office of Foreign Assets Control ; 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 residential and B2B services in (i) over 20 countries, primarily inLatin America and theCaribbean , through C&W Caribbean and Networks and C&W Panama, (ii)Puerto Rico , through Liberty Puerto Rico, (iii)Chile , through VTR, and (iv)Costa Rica , through Cabletica. Through our Networks & LatAm business, C&W Caribbean and Networks also provides (i) B2B services in certain other countries inLatin America and theCaribbean and (ii) wholesale communication services over its subsea and terrestrial fiber optic cable networks that connect over 40 markets in that region. Operations AtJune 30, 2021 , we (i) owned and operated fixed networks that passed 8,126,800 homes and served 6,332,700 RGUs, comprising 2,822,300 broadband internet subscribers, 1,968,900 video subscribers and 1,541,500 fixed-line telephony subscribers, and (ii) served 4,623,900 mobile subscribers. 39 -------------------------------------------------------------------------------- During the first quarter of 2021, we completed an organizational change with respect to the management of CWP, VTR and Cabletica. As a result of this organizational change, VTR and Cabletica are now operating and reportable segments. Accordingly, as ofJune 30, 2021 , our reportable segments are as follows: •C&W Caribbean and Networks; •C&W Panama; •Liberty Puerto Rico; •VTR; and •Cabletica. 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. COVID-19 InDecember 2019 , COVID-19 was reported inWuhan, China . OnMarch 11, 2020 , theWorld Health Organization declared the outbreak a "pandemic," pointing to the sustained risk of further global spread. To date, cases of COVID-19 have been confirmed in each of the markets in which we operate. COVID-19 negatively impacted our operations relative to periods prior to the pandemic, particularly with respect to revenue associated with B2B and mobile operations within our C&WCaribbean and Networks, C&W Panama and VTR segments. These impacts are primarily the result of lockdowns, moratoriums, the cancellation of live sporting events, and mobility, travel and tourism restrictions across many of the markets in which we operate. The extent to which COVID-19 continues to impact our operational and financial performance will depend on certain developments, which include, among other factors: •the duration and spread of the outbreak, including the impact of variants; •the ability of governments and medical professionals in our markets to respond further to the outbreak, including securing access to a vaccine and vaccinating citizens; •the actions by governments to require the extension of services for individuals regardless of payment status; •the impact of changes to, or new, government regulations imposed in response to the pandemic, including laws and moratoriums; •the impact on our customers and our sales cycles; •the impact on actual and expected customer receivable collection patterns; •the impact on our employees, including that from labor shortages or work from home initiatives; •the impacts on foreign currency and interest rate fluctuations; and •the effect on our vendors and impacts to our supply chain that might impact our customers' ability to use our services. Given the impacts 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. As COVID-19 continues to spread, we have taken, and expect to continue to take, a variety of measures to promote the safety and security of our employees, and ensure the availability of our communication services. Telefónica-Costa Rica Acquisition OnJuly 30, 2020 , we entered into a definitive agreement to acquire Telefónica S.A.'s wireless operations inCosta Rica in an all-cash transaction based upon an enterprise value of$500 million on a cash- and debt-free basis. The transaction is subject to certain customary closing conditions, including regulatory approvals. OnAugust 2, 2021 , we announced that the parties had received the required government and regulatory approvals to complete the transaction. We expect to close the transaction bymid-August 2021 . AT&T Acquisition OnOctober 9, 2019 ,Liberty Latin America's wholly-owned subsidiary, LibertyPuerto Rico , agreed to acquire AT&T's wireless and wireline operations inPuerto Rico and theU.S. Virgin Islands in an all-cash transaction. The AT&T Acquisition closed onOctober 31, 2020 . The integration of the business of AT&T with our existing operations is progressing efficiently, and as a result, we now expect to incur integration-related operating costs totaling approximately$20 million during 2021. 40 -------------------------------------------------------------------------------- Material Changes in Results of Operations The comparability of our operating results during the three and six months endedJune 30, 2021 and 2020 is affected by acquisitions, a disposal and FX. 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 six months endedJune 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. We (i) acquired (a) AT&T's wireless and wireline operations inPuerto Rico and theU.S. Virgin Islands inOctober 2020 and (b) a small B2B operation in theCayman Islands inJuly 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 inPuerto Rico inJanuary 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, Cabletica and certain entities within C&W have functional currencies other than theU.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 theU.S. dollar per one Chilean peso depreciated by 13% and 11% for the three and six months endedJune 30, 2021 , as compared to the corresponding periods in 2020. 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 Cabletica and certain subsidiaries of C&W 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. 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 otherU.S. GAAP measures of income or loss. 41 -------------------------------------------------------------------------------- A reconciliation of total operating income (loss), the nearestU.S. GAAP measure, to Adjusted OIBDA on a consolidated basis, is presented below for the periods indicated. Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 in millions Operating income (loss)$ 160.2 $ (206.0) $ 338.4 $ (98.2) Share-based compensation expense 32.8 23.5 55.8 47.3 Depreciation and amortization 254.0 216.4 499.9 429.9 Impairment, restructuring and other operating items, net 17.0 298.7 19.2 317.5 Consolidated Adjusted OIBDA$ 464.0 $
332.6
The following tables set forth organic and non-organic changes in Adjusted OIBDA
for the periods indicated:
Liberty
C&W Caribbean Puerto Rico Intersegment
and Networks C&W Panama (a) VTR Cabletica Corporate eliminations Consolidated
in millions
Adjusted OIBDA for the three months
ending:
June 30, 2020 $ 166.7 $ 36.9
- $ 332.6
Organic changes related to:
Revenue 33.1 15.9 19.9 (10.7) 4.4 5.4 (0.7) 67.3
Programming and other direct costs (4.9) (9.8) (1.4) (3.7) (3.2) - (0.5) (23.5)
Other operating costs and expenses (4.8) 2.6 (5.1) 1.4 (0.8) (8.2) 1.2 (13.7)
Non-organic increases (decreases):
FX (2.3) - - 8.6 (0.9) - - 5.4
Acquisitions/disposition, net 0.3 - 95.6 - - - - 95.9
June 30, 2021 $ 188.1 $ 45.6 $ 161.4 $ 68.7 $ 12.7 $ (12.5) $ - $ 464.0 (a)The non-organic change to Adjusted OIBDA resulting from an acquisition
includes
42
--------------------------------------------------------------------------------
Liberty
C&W Caribbean Puerto Rico Intersegment
and Networks C&W Panama (a) VTR Cabletica Corporate eliminations Consolidated
in millions
Adjusted OIBDA for the six months
ending:
June 30, 2020 $ 353.7 $ 82.7
- $ 696.5
Organic changes related to:
Revenue 16.2 (0.4) 41.0 (27.5) 9.6 10.8 (1.8) 47.9
Programming and other direct costs 1.6 (3.6) (4.3) (2.3) (5.3) - 0.1 (13.8)
Other operating costs and expenses 1.9 10.9 (6.9) 0.3 (2.0) (11.3) 1.7 (5.4)
Non-organic increases (decreases):
FX (4.7) - - 15.5 (2.0) - - 8.8
Acquisitions/disposition, net 0.7 - 178.6 - - - - 179.3
June 30, 2021 $ 369.4 $ 89.6 $ 311.3 $ 139.2 $ 26.8 $ (23.0) $ - $ 913.3
(a)The non-organic change to Adjusted OIBDA resulting from an acquisition
includes $16 million of net roaming revenue.
Adjusted OIBDA Margin
The following table sets forth the Adjusted OIBDA margins (Adjusted OIBDA
divided by revenue) of each of our reportable segments:
Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
%
C&W Caribbean and Networks 43.3 % 41.2 % 42.8 % 41.3 %
C&W Panama 35.6 % 32.9 % 35.8 % 33.0 %
Liberty Puerto Rico 44.8 % 48.0 % 43.1 % 48.2 %
VTR 32.8 % 37.9 % 33.2 % 38.3 %
Cabletica 35.0 % 38.2 % 37.0 % 38.8 %
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 margins for Liberty
Puerto Rico are primarily related to the inclusion of Liberty Mobile operations
following the AT&T Acquisition that generate a lower Adjusted OIBDA margin
relative to the legacy operations. The decreases in the Adjusted OIBDA margins
for VTR are primarily related to a decline in revenue, as further discussed
below.
Revenue
All of our segments derive their revenue primarily from (i) residential fixed
services, including video, broadband internet and fixed-line telephony, (ii)
with the exception of Cabletica, residential mobile services, and (iii) with the
exception of Cabletica, B2B services. C&W Caribbean and Networks also provides
wholesale communication services over its subsea and terrestrial fiber optic
cable networks.
43
--------------------------------------------------------------------------------
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 set forth the organic and non-organic changes in revenue by
reportable segment for the periods indicated.
Increase (decrease) from:
Three months ended June 30, Increase Acquisitions
2021 2020 (decrease) FX (disposition), net Organic
in millions
C&W Caribbean and Networks
29.3$ (5.7) $ 1.9$ 33.1 C&W Panama 128.1 112.2 15.9 - - 15.9 Liberty Puerto Rico 360.4 109.1 251.3 - 231.4 19.9 VTR 209.3 193.1 16.2 26.9 - (10.7) Cabletica 36.3 34.6 1.7 (2.7) - 4.4 Corporate (a) 5.4 - 5.4 - - 5.4 Intersegment eliminations (5.7) (5.0) (0.7) - - (0.7) Total$ 1,168.0 $ 848.9 $ 319.1 $ 18.5 $ 233.3$ 67.3 Increase (decrease) from: Six months ended June 30, Increase Acquisitions 2021 2020 (decrease) FX (disposition), net Organic in millions C&W Caribbean and Networks$ 864.0 $ 856.9 $ 7.1 $ (13.0) $ 3.9$ 16.2 C&W Panama 250.1 250.5 (0.4) - - (0.4) Liberty Puerto Rico 721.7 213.7 508.0 - 467.0 41.0 VTR 419.6 399.5 20.1 47.6 - (27.5) Cabletica 72.5 68.3 4.2 (5.4) - 9.6 Corporate (a) 10.8 - 10.8 - - 10.8 Intersegment eliminations (10.8) (9.0) (1.8) - - (1.8) Total$ 2,327.9 $ 1,779.9 $ 548.0 $ 29.2 $ 470.9$ 47.9
(a)Amounts relate to services we provide for mobile handset insurance following the closing of the AT&T Acquisition.
44
--------------------------------------------------------------------------------
C&W Caribbean and Networks. C&W Caribbean and Networks's revenue by major
category is set forth below:
Three months ended June 30, Increase (decrease)
2021 2020 $ %
in millions, except percentages
Residential revenue:
Residential fixed revenue:
Subscription revenue:
Video $ 33.4 $ 35.5 $ (2.1) (6)
Broadband internet 67.7 61.0 6.7 11
Fixed-line telephony 17.1 19.3 (2.2) (11)
Total subscription revenue 118.2 115.8 2.4 2
Non-subscription revenue 11.4 8.7 2.7 31
Total residential fixed revenue 129.6 124.5 5.1 4
Residential mobile revenue:
Service revenue 75.0 67.6 7.4 11
Interconnect, inbound roaming, equipment sales and other (a)
14.0 8.9 5.1 57
Total residential mobile revenue 89.0 76.5 12.5 16
Total residential revenue 218.6 201.0 17.6 9
B2B revenue:
Service revenue 152.8 142.5 10.3 7
Subsea network revenue 62.8 61.4 1.4 -
Total B2B revenue 215.6 203.9 11.7 -
Total $ 434.2 $ 404.9 $ 29.3 -
(a) Revenue from inbound roaming was
45
--------------------------------------------------------------------------------
Six months ended June 30, Increase (decrease)
2021 2020 $ %
in millions, except percentages
Residential revenue:
Residential fixed revenue:
Subscription revenue:
Video $ 67.7 $ 72.8 $ (5.1) (7)
Broadband internet 134.3 122.4 11.9 10
Fixed-line telephony 33.6 38.6 (5.0) (13)
Total subscription revenue 235.6 233.8 1.8 1
Non-subscription revenue 22.1 21.8 0.3 1
Total residential fixed revenue 257.7 255.6 2.1 1
Residential mobile revenue:
Service revenue 146.8 146.4 0.4 -
Interconnect, inbound roaming, equipment sales and other (a)
25.4 22.6 2.8 12
Total residential mobile revenue 172.2 169.0 3.2 2
Total residential revenue 429.9 424.6 5.3 1
B2B revenue:
Service revenue 303.6 300.2 3.4 1
Subsea network revenue 130.5 132.1 (1.6) (1)
Total B2B revenue 434.1 432.3 1.8 -
Total $ 864.0 $ 856.9 $ 7.1 1
(a) Revenue from inbound roaming was $11 million and $8 million , respectively.
The details of the changes in C&W Caribbean and Networks's revenue during the
three and six months ended June 30, 2021 , as compared to the corresponding
periods in 2020, are set forth below (in millions):
Three-month Six-month
comparison comparison
Increase (decrease) in residential fixed subscription revenue due to change in: Average number of RGUs (a)
$ 8.2 $ 16.1
ARPU (b) (4.1) (10.3)
Increase in residential fixed non-subscription revenue (c) 2.7 0.6
Total increase in residential fixed revenue 6.8 6.4
Increase in residential mobile service revenue (d) 9.0 3.7
Increase in residential mobile interconnect, inbound roaming, equipment sales and other revenue (e)
5.3 3.2
Increase in B2B service revenue (f) 11.0 5.2
Increase (decrease) in B2B subsea network revenue (g) 1.0 (2.3)
Total organic increase 33.1 16.2
Impact of an acquisition 1.9 3.9
Impact of FX (5.7) (13.0)
Total $ 29.3 $ 7.1
(a)The increases are primarily attributable to higher average broadband internet RGUs.
(b)The decreases are primarily due to lower ARPU from fixed-line telephony and
video services.
(c)The increases are primarily due to the net effect of (i) lower volumes of
interconnect revenue across most of our markets, (ii) increases in late fee
revenue and (iii) individually insignificant increases in other fixed
non-subscription categories.
46
--------------------------------------------------------------------------------
(d)The increases are due to the net effect of (i) higher ARPU from mobile
services, primarily due to the relaxing of COVID-19 lockdowns and restrictions
in most of our markets, and (ii) during the six-month comparison, lower average
numbers of mobile subscribers, as the increase in average subscribers on
postpaid plans was more than offset by a decrease in average subscribers on
prepaid plans, which was mainly a result of continued COVID-19-related travel
restrictions.
(e)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, and (ii) a $2 million increase related to
the settlement of a minimum commitment guarantee associated with inbound roaming
during the second quarter of 2021.
(f)The increases are 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) an increase in
nonrecurring projects revenue.
(g)The decrease for the six-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
and (ii) a $6 million increase associated with the renegotiation of a customer
contract recognized during the first quarter of 2021. In addition, both
comparison periods include increases associated with continued 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 June 30, Increase (decrease)
2021 2020 $ %
in millions, except percentages
Residential revenue:
Residential fixed revenue:
Subscription revenue:
Video $ 6.2 $ 7.2 $ (1.0) (14)
Broadband internet 10.8 9.5 1.3 14
Fixed-line telephony 4.2 4.9 (0.7) (14)
Total subscription revenue 21.2 21.6 (0.4) (2)
Non-subscription revenue 2.4 2.6 (0.2) (8)
Total residential fixed revenue 23.6 24.2 (0.6) (2)
Residential mobile revenue:
Service revenue 39.4 36.8 2.6 7
Interconnect, inbound roaming, equipment sales and other (a)
11.3 9.4 1.9 20
Total residential mobile revenue 50.7 46.2 4.5 10
Total residential revenue 74.3 70.4 3.9 6
B2B service revenue 53.8 41.8 12.0 29
Total $ 128.1 $ 112.2 $ 15.9 14
(a)Revenue from inbound roaming was
47
--------------------------------------------------------------------------------
Six months ended June 30, Increase (decrease)
2021 2020 $ %
in millions, except percentages
Residential revenue:
Residential fixed revenue:
Subscription revenue:
Video $ 12.4 $ 14.8 $ (2.4) (16)
Broadband internet 21.5 19.1 2.4 13
Fixed-line telephony 8.5 9.9 (1.4) (14)
Total subscription revenue 42.4 43.8 (1.4) (3)
Non-subscription revenue 4.9 6.4 (1.5) (23)
Total residential fixed revenue 47.3 50.2 (2.9) (6)
Residential mobile revenue:
Service revenue 78.7 81.0 (2.3) (3)
Interconnect, inbound roaming, equipment sales and other (a)
21.6 21.2 0.4 2
Total residential mobile revenue 100.3 102.2 (1.9) (2)
Total residential revenue 147.6 152.4 (4.8) (3)
B2B service revenue 102.5 98.1 4.4 4
Total $ 250.1 $ 250.5 $ (0.4) -
(a)Revenue from inbound roaming was $1 million for each of the periods
presented.
The details of the changes in C&W Panama's revenue during the three and six
months ended June 30, 2021 , as compared to the corresponding periods in 2020,
are set forth below (in millions):
Three-month Six-month
comparison comparison
Increase (decrease) in residential fixed subscription revenue due to change in: Average number of RGUs (a)
$ 2.1 $ 3.5
ARPU (b) (2.3) (4.7)
Decrease in residential fixed non-subscription revenue (c) (0.1) (1.4)
Total decrease in residential fixed revenue (0.3) (2.6)
Increase (decrease) in residential mobile service revenue (d) 2.5 (2.4)
Increase in residential mobile interconnect, inbound roaming, equipment sales and other revenue (e)
2.0 0.5
Increase in B2B service revenue (f) 11.7 4.1
Total organic increase (decrease) $
15.9
(a)The increases are primarily attributable to higher average broadband internet 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 six-month comparison, a decrease in payphone revenue.
(d)The increase during the three-month comparison is primarily due to higher
average numbers of mobile subscribers on prepaid plans. The decrease during the
six-month comparison is due to the net effect of (i) lower ARPU from mobile
services, mainly attributable to prepaid plans resulting from (a) COVID-19
lockdowns negatively impacting customers' ability to recharge handset devices
and (b) increased competition, and (ii) higher average numbers of mobile
subscribers on prepaid plans.
48
--------------------------------------------------------------------------------
(e)The increase during the three-month comparison is primarily attributable to
higher volumes of handset sales, as COVID-19 related lockdowns in 2020
negatively impacted customers' ability to purchase handsets.
(f)The increases are primarily due to (i) higher revenues from mobile services
and (ii) increases driven by certain nonrecurring government-related projects,
some of which were put on hold during 2020 due to the economic uncertainly of
the impact of COVID-19.
Liberty Puerto Rico . Liberty Puerto Rico's revenue by major category is set
forth below:
Three months ended June 30, Increase
2021 2020 $ %
in millions, except percentages
Residential fixed revenue:
Subscription revenue:
Video $ 39.2 $ 36.7 $ 2.5 7
Broadband internet 63.2 49.2 14.0 28
Fixed-line telephony 7.1 6.2 0.9 15
Total subscription revenue 109.5 92.1 17.4 19
Non-subscription revenue 4.9 3.8 1.1 29
Total residential fixed revenue 114.4 95.9 18.5 19
Residential mobile revenue:
Service revenue 114.7 - 114.7 N.M.
Interconnect, inbound roaming, equipment sales and other (a)
70.9 - 70.9 N.M.
Total residential mobile revenue 185.6 - 185.6 N.M.
Total residential revenue 300.0 95.9 204.1 213
B2B service revenue 51.9 13.2 38.7 293
Other revenue (b) 8.5 - 8.5 N.M.
Total $ 360.4 $ 109.1 $ 251.3 230
N.M. - Not Meaningful.
(a)Revenue from inbound roaming was
(b)Amount relates to funds received from the
49
--------------------------------------------------------------------------------
Six months ended June 30, Increase
2021 2020 $ %
in millions, except percentages
Residential fixed revenue:
Subscription revenue:
Video $ 77.8 $ 72.0 $ 5.8 8
Broadband internet 124.6 94.7 29.9 32
Fixed-line telephony 14.1 12.1 2.0 17
Total subscription revenue 216.5 178.8 37.7 21
Non-subscription revenue 9.1 8.4 0.7 8
Total residential fixed revenue 225.6 187.2 38.4 21
Residential mobile revenue:
Service revenue 232.1 - 232.1 N.M.
Interconnect, inbound roaming, equipment sales and other (a)
143.0 - 143.0 N.M.
Total residential mobile revenue 375.1 - 375.1 N.M.
Total residential revenue 600.7 187.2 413.5 221
B2B service revenue 104.0 26.5 77.5 292
Other revenue (b) 17.0 - 17.0 N.M.
Total $ 721.7 $ 213.7 $ 508.0 238
N.M. - Not Meaningful.
(a)Revenue from inbound roaming was $38 million and nil, respectively.
(b)Amount relates to funds received from the FCC 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
six months ended June 30, 2021 , as compared to the corresponding periods in
2020, are set forth below (in millions):
Three-month Six-month
comparison comparison
Increase in residential fixed subscription revenue due to change
in:
Average number of RGUs (a) $ 15.5 $ 30.3
ARPU (b) 2.0 7.5
Increase in residential fixed non-subscription revenue 1.0 0.6
Total increase in residential fixed revenue 18.5 38.4
Increase in B2B service (c) 1.4 2.6
Total organic increase 19.9 41.0
Impact of an acquisition and a disposition, net 231.4 467.0
Total $ 251.3 $ 508.0
(a)The increases are 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 are primarily due to higher ARPU from broadband internet
services. In addition, the six-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 .
50
--------------------------------------------------------------------------------
(c)The increases are primarily due to (i) new customers and (ii) the impact to
the comparisons resulting from credits issued to customers in the second quarter
of 2020 as a result of suspended service due to COVID-19.
VTR. VTR's revenue by major category is set forth below:
Three months ended June 30, Increase (decrease)
2021 2020 $ %
in millions, except percentages
Residential revenue:
Residential fixed revenue:
Subscription revenue:
Video $ 77.4 $ 67.0 $ 10.4 16
Broadband internet 84.7 80.8 3.9 5
Fixed-line telephony 19.9 17.6 2.3 13
Total subscription revenue 182.0 165.4 16.6 10
Non-subscription revenue 4.0 4.7 (0.7) (15)
Total residential fixed revenue 186.0 170.1 15.9 9
Residential mobile revenue:
Service revenue 13.0 13.8 (0.8) (6)
Interconnect, inbound roaming, equipment sales and other
1.8 1.6 0.2 13
Total residential mobile revenue 14.8 15.4 (0.6) (4)
Total residential revenue 200.8 185.5 15.3 8
B2B service revenue 8.5 7.6 0.9 12
Total $ 209.3 $ 193.1 $ 16.2 8
Six months ended June 30, Increase (decrease)
2021 2020 $ %
in millions, except percentages
Residential revenue:
Residential fixed revenue:
Subscription revenue:
Video $ 155.7 $ 142.6 $ 13.1 9
Broadband internet 169.5 162.7 6.8 4
Fixed-line telephony 39.9 37.2 2.7 7
Total subscription revenue 365.1 342.5 22.6 7
Non-subscription revenue 7.4 9.6 (2.2) (23)
Total residential fixed revenue 372.5 352.1 20.4 6
Residential mobile revenue:
Service revenue 26.2 28.4 (2.2) (8)
Interconnect, inbound roaming, equipment sales and other
4.1 3.6 0.5 14
Total residential mobile revenue 30.3 32.0 (1.7) (5)
Total residential revenue 402.8 384.1 18.7 5
B2B service revenue 16.8 15.4 1.4 9
Total $ 419.6 $ 399.5 $ 20.1 5
51--------------------------------------------------------------------------------
The details of the changes in VTR's revenue during the three and six months
ended
Three-month Six-month
comparison comparison
Decrease in residential fixed subscription revenue due to change
in:
Average number of RGUs (a) $ (7.0) $ (14.0)
ARPU (b) - (5.0)
Decrease in residential fixed non-subscription revenue (c) (1.1) (2.9)
Total decrease in residential fixed revenue (8.1) (21.9)
Decrease in residential mobile service revenue (d) (2.5) (5.2)
Change in residential mobile interconnect, inbound roaming, equipment sales and other revenue
- -
Decrease in B2B service revenue (0.1) (0.4)
Total organic decrease (10.7) (27.5)
Impact of FX 26.9 47.6
Total $ 16.2 $ 20.1 (a)The decreases are attributable to lower average broadband internet, video and fixed-line telephony RGUs.
(b)The change during the three-month comparison is primarily due to (i) lower ARPU from broadband internet services, partially the result of continued high levels of competition, and (ii) 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. The decrease during the six-month comparison is primarily due to lower ARPU from broadband internet services, partially a result of continued high levels of competition. (c)The decreases are primarily attributable to (i) lower activations, installations and reconnects and (ii) lower volumes of interconnect revenue. (d)The decreases are due to lower ARPU from mobile services and lower average numbers of mobile subscribers.
Cabletica. Cabletica's revenue by major category is set forth below:
Three months ended June 30, Increase (decrease)
2021 2020 $ %
in millions, except percentages
Residential revenue:
Residential fixed revenue:
Subscription revenue:
Video $ 19.0 $ 20.5 $ (1.5) (7)
Broadband internet 14.5 12.5 2.0 16
Fixed-line telephony 1.1 0.9 0.2 22
Total subscription revenue 34.6 33.9 0.7 2
Non-subscription revenue 1.7 0.7 1.0 143
Total $ 36.3 $ 34.6 $ 1.7 5
52--------------------------------------------------------------------------------
Six months ended June 30, Increase (decrease)
2021 2020 $ %
in millions, except percentages
Residential revenue:
Residential fixed revenue:
Subscription revenue:
Video $ 38.5 $ 39.9 $ (1.4) (4)
Broadband internet 28.5 25.0 3.5 14
Fixed-line telephony 2.2 1.6 0.6 38
Total subscription revenue 69.2 66.5 2.7 4
Non-subscription revenue 3.3 1.8 1.5 83
Total $ 72.5 $ 68.3 $ 4.2 6
The details of the changes in Cabletica's revenue during three and six months
ended June 30, 2021 , as compared to the corresponding periods in 2020, are set
forth below (in millions):
Three-month Six-month
comparison comparison
Increase in residential fixed subscription revenue due to change
in:
Average number of RGUs (a) $ 1.5 $ 3.0
ARPU (b) 1.9 4.9
Increase in residential fixed non-subscription revenue 1.0 1.7
Total organic increase 4.4 9.6
Impact of FX (2.7) (5.4)
Total $ 1.7 $ 4.2
(a)The increases are primarily attributable to higher average broadband internet RGUs.
(b)The increases are primarily due to higher ARPU from broadband internet and
video services.
Programming and other direct costs of services
Programming and other direct costs of services include programming and copyright
costs, interconnect and access costs, 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 set forth the organic and non-organic changes
in programming and other direct costs of services on a consolidated basis for
the periods indicated.
Increase (decrease) from:
Three months ended June 30, Acquisitions
2021 2020 Increase FX (disposition), net Organic
in millions
Programming and copyright $ 114.4 $ 92.9 $ 21.5 $ 5.6 $ 3.4 $ 12.5
Interconnect 65.8 58.7 7.1 (0.3) 9.0 (1.6)
Equipment and other 95.5 28.1 67.4 - 54.8 12.6
Total programming and other
direct costs of services $ 275.7 $ 179.7 $ 96.0 $ 5.3 $ 67.2 $ 23.5
53--------------------------------------------------------------------------------
Increase (decrease) from:
Six months ended June 30, Acquisitions
2021 2020 Increase FX (disposition), net Organic
in millions
Programming and copyright $ 226.2 $ 193.5 $ 32.7 $ 9.2 $ 6.4 $ 17.1
Interconnect 132.2 125.0 7.2 (1.1) 17.7 (9.4)
Equipment and other 197.5 72.0 125.5 0.2 119.2 6.1
Total programming and other
direct costs of services $ 555.9 $ 390.5 $ 165.4 $ 8.3 $ 143.3 $ 13.8 C&W Caribbean and Networks. The following tables set 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 June 30, Increase
2021 2020 (decrease) FX An acquisition Organic
in millions
Programming and copyright $ 23.2 $ 21.9 $ 1.3 $ (0.3) $ - $ 1.6
Interconnect 37.6 38.5 (0.9) (1.3) - 0.4
Equipment and other 16.4 12.8 3.6 (0.2) 0.9 2.9
Total programming and other
direct costs of services $ 77.2 $ 73.2 $ 4.0 $ (1.8) $ 0.9 $ 4.9
Increase (decrease) from:
Six months ended June 30, Increase
2021 2020 (decrease) FX An acquisition Organic
in millions
Programming and copyright $ 46.9 $ 46.7 $
0.2 $ (0.8) $ - $ 1.0
Interconnect 75.2 83.1 (7.9) (3.0) - (4.9)
Equipment and other 33.0 29.3 3.7 (0.4) 1.8 2.3
Total programming and other
direct costs of services $ 155.1 $ 159.1 $ (4.0) $ (4.2) $ 1.8 $ (1.6)
•Programming and copyright: The organic increases are primarily due to higher
premium content costs, as certain sporting events were postponed in the
prior-year periods due to COVID-19. These events included (i) the English
Premier League that was eventually completed during the third quarter of 2020
and (ii) the Indian Premier League that was rescheduled and partially played
during the second quarter of 2021 before being further postponed due to
COVID-19.
•Interconnect: The organic decrease in the six-month comparison is primarily due to individually insignificant decreases.
•Equipment and other: The organic increases are primarily due to higher volumes
of equipment sales, mainly driven by easing of COVID-19 related restrictions in
certain of our markets.
54
--------------------------------------------------------------------------------
C&W Panama. The following tables set forth the organic changes in programming
and other direct costs of services for our C&W Panama segment for the periods
indicated.
Three months ended June 30, Organic
2021 2020 increase
in millions
Programming and copyright $ 3.9 $ 3.8 $ 0.1
Interconnect 10.3 9.9 0.4
Equipment and other 22.4 13.1 9.3
Total programming and other direct costs of services $ 36.6 $ 26.8 $ 9.8
Six months ended June 30, Organic increase
2021 2020 (decrease)
in millions
Programming and copyright $ 7.6 $ 8.0 $ (0.4)
Interconnect 20.2 20.3 (0.1)
Equipment and other 40.0 35.9 4.1Total programming and other direct costs of services $ 67.8
•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 projects, some of which were put on hold during 2020 due to the economic uncertainly of the impact of COVID-19. LibertyPuerto Rico . The following tables set 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. Increase from: Three months ended June 30, Acquisition 2021 2020 Increase (disposition), net Organic in millions Programming and copyright $ 27.8$ 23.5 $ 4.3 $ 3.4$ 0.9 Interconnect 11.7 2.2 9.5 9.0 0.5 Equipment and other 54.0 0.1 53.9 53.9 - Total programming and other direct costs of services $ 93.5$ 25.8 $ 67.7 $ 66.3$ 1.4 Increase from: Six months ended June 30, Acquisition 2021 2020 Increase (disposition), net Organic in millions Programming and copyright $ 55.0$ 45.5 $ 9.5 $ 6.4$ 3.1 Interconnect 23.2 4.3 18.9 17.7 1.2 Equipment and other 117.5 0.1 117.4 117.4 - Total programming and other direct costs of services$ 195.7 $ 49.9 $ 145.8 $ 141.5$ 4.3 •Programming and copyright: The organic increases are primarily attributable to higher programming rates and, for the six-month comparison, a higher average number of video subscribers. 55 -------------------------------------------------------------------------------- VTR. The following tables set forth the organic and non-organic changes in programming and other direct costs of services for our VTR segment for the periods indicated. Three months ended June 30, Increase Increase (decrease) from: 2021 2020 (decrease) FX Organic in millions Programming and copyright $ 50.5$ 36.4 $ 14.1 $ 6.5$ 7.6 Interconnect 8.1 10.1 (2.0) 1.1 (3.1) Equipment and other 2.5 3.0 (0.5) 0.3 (0.8) Total programming and other direct costs of services $ 61.1$ 49.5 $ 11.6 $ 7.9$ 3.7 Six months ended June 30, Increase Increase (decrease) from: 2021 2020 (decrease) FX Organic in millions Programming and copyright$ 98.9 $ 77.7 $ 21.2 $ 11.3$ 9.9 Interconnect 17.7 21.3 (3.6) 2.1 (5.7) Equipment and other 6.5 7.7 (1.2) 0.7 (1.9) Total programming and other direct costs of services$ 123.1 $ 106.7 $ 16.4 $ 14.1$ 2.3 •Programming and copyright: The organic increases are primarily due to higher premium and basic content costs. During 2020, programming costs were lower due to the renegotiation of a programming contract governing rates for live soccer matches, which were cancelled as a result of COVID-19. In addition, the three and six-month comparisons include a decrease of$1 million and nil, respectively, related to the foreign currency impact of programming contracts denominated inU.S. dollars. •Interconnect: The organic decreases are primarily due to (i) decreases in MVNO charges of$1 million as we renegotiated our contract during the second quarter of 2021, and (ii) lower interconnect rates and volumes. •Equipment and other: The organic decreases are primarily due to the net effect of (i) lower volumes of handset sales, (ii) higher handset prices and (iii) decreases associated with the foreign currency impact of handset contracts denominated inU.S. dollars. Cabletica. The following tables set forth the organic and non-organic changes in programming and other direct costs of services for our Cabletica segment for the periods indicated. Three months ended June 30, Increase (decrease) from: 2021 2020 Increase FX Organic in millions Programming and copyright$ 9.0 $ 7.3 $ 1.7 $ (0.6)$ 2.3 Interconnect 1.6 1.6 - (0.1) 0.1 Equipment and other 0.7 - 0.7 (0.1) 0.8 Total programming and other direct costs of services$ 11.3 $ 8.9 $ 2.4 $ (0.8)$ 3.2 56
--------------------------------------------------------------------------------
Six months ended June 30, Increase (decrease) from:
2021 2020 Increase FX Organic
in millions
Programming and copyright $ 17.8 $ 15.6 $ 2.2 $ (1.3) $ 3.5
Interconnect 3.0 2.8 0.2 (0.2) 0.4
Equipment and other 1.5 0.2 1.3 (0.1) 1.4
Total programming and other direct costs
of services $ 22.3 $ 18.6 $ 3.7 $ (1.6) $ 5.3
•Programming and copyright: The organic increases are primarily due to increases
in certain premium content costs.
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, 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, 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) bonus-related expenses that will be paid in
the form of equity.
Consolidated. The following tables set 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 June 30, Acquisitions
2021 2020 Increase FX (disposition), net Organic
in millions
Personnel and contract labor
$ 30.6 $ 1.3 $ 22.6$ 6.7 Network-related 80.6 62.8 17.8 2.2 10.6 5.0 Service-related 45.3 36.5 8.8 1.1 6.9 0.8 Commercial 53.7 39.4 14.3 2.5 7.0 4.8 Facility, provision, franchise and other 104.9 84.7 20.2 0.7 23.1
(3.6)
Share-based compensation expense 32.8 23.5 9.3 0.1 0.5
8.7
Total other operating costs and expenses$ 461.1 $ 360.1 $ 101.0 $ 7.9 $ 70.7$ 22.4 57
--------------------------------------------------------------------------------
Increase (decrease) from:
Six months ended June 30, Acquisitions
2021 2020 Increase FX (disposition), net Organic
in millions
Personnel and contract labor
$ 44.5 $ 1.8 $ 43.3$ (0.6) Network-related 157.8 126.8 31.0 3.3 18.8 8.9 Service-related 92.8 74.8 18.0 1.8 14.6 1.6 Commercial 106.1 81.5 24.6 4.2 14.8 5.6 Facility, provision, franchise and other 219.8 172.1 47.7 1.0 56.8
(10.1)
Share-based compensation expense 55.8 47.3 8.5 0.3 0.9
7.3
Total other operating costs and expenses$ 914.5 $ 740.2 $ 174.3 $ 12.4 $ 149.2$ 12.7
For additional information regarding our share-based compensation, see Results of Operations (below Adjusted OIBDA) discussion and analysis below.
C&W Caribbean and Networks. The following tables set 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.
Increase (decrease) from:
Three months ended June 30, Increase
2021 2020 (decrease) FX An acquisition Organic
in millions
Personnel and contract labor $ 62.1
$ (0.9) $ (0.4) $ 0.6$ (1.1) Network-related 37.4 34.3 3.1 (0.5) - 3.6 Service-related 17.7 17.0 0.7 (0.1) 0.1 0.7 Commercial 12.4 10.5 1.9 (0.4) - 2.3 Facility, provision, franchise and other 39.3 40.2 (0.9) (0.2) -
(0.7)
Share-based compensation expense 8.9 6.9 2.0 (0.1) 0.5
1.6
Total other operating costs and expenses$ 177.8 $ 171.9 $ 5.9$ (1.7) $ 1.2$ 6.4 Increase (decrease) from: Six months ended June 30, Increase 2021 2020 (decrease) FX An acquisition Organic in millions Personnel and contract labor$ 126.4 $ 130.3 $ (3.9) $ (1.3) $ 1.3$ (3.9) Network-related 75.2 69.7 5.5 (1.1) - 6.6 Service-related 35.4 35.9 (0.5) (0.2) 0.1 (0.4) Commercial 23.6 23.7 (0.1) (0.8) - 0.7 Facility, provision, franchise and other 78.9 84.5 (5.6) (0.7) -
(4.9)
Share-based compensation expense 15.1 13.8 1.3 (0.1) 0.9
0.5
Total other operating costs and expenses$ 354.6 $ 357.9 $ (3.3) $ (4.2) $ 2.3$ (1.4) 58
--------------------------------------------------------------------------------
•Personnel and contract labor: The organic decreases are primarily due to lower salaries and other personnel costs, mainly associated with the benefit of certain ongoing restructuring activities.
•Network-related: The organic increases are primarily due to higher maintenance
and utilities costs.
•Commercial: The organic increase in the three-month comparison is primarily due
to higher marketing and sales costs, as promotional activities were reduced in
the prior year period due to certain adverse economic impacts caused by
COVID-19.
•Facility, provision, franchise and other costs: The organic decreases are
primarily due to the net effect 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 losses associated with certain
B2B customers and (c) changes in our general expectations related to our
customers' ability to pay, (ii) higher rent-related expenses and (iii) during
the six-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 set forth the organic changes in other
operating costs and expenses for our C&W Panama segment for the periods
indicated.
Three months ended June 30, Organic increase
2021 2020 (decrease)
in millions
Personnel and contract labor $ 16.9 $ 14.3 $ 2.6
Network-related 10.2 9.5 0.7
Service-related 3.8 3.2 0.6
Commercial 5.0 4.9 0.1
Facility, provision, franchise and other 10.0 16.6 (6.6)
Share-based compensation expense 0.9 1.0 (0.1)
Total other operating costs and expenses $ 46.8 $ 49.5 $ (2.7)
Six months ended June 30, Organic increase
2021 2020 (decrease)
in millions
Personnel and contract labor $ 34.1 $ 34.9 $ (0.8)
Network-related 20.0 21.0 (1.0)
Service-related 7.7 7.6 0.1
Commercial 10.1 10.6 (0.5)
Facility, provision, franchise and other 20.8 29.5 (8.7)
Share-based compensation expense 1.6 1.5 0.1
Total other operating costs and expenses $
94.3
•Personnel and contract labor: The organic increase for the three-month comparison is primarily due to higher salaries and other personnel costs.
•Facility, provision, franchise and other costs: The organic decreases are primarily due to lower bad debt provisions, largely due to COVID-19 related impacts in the 2020 periods.
59
--------------------------------------------------------------------------------
Liberty
Increase (decrease) from:
Three months ended June 30, Increase Acquisition
2021 2020 (decrease) (disposition), net Organic
in millions
Personnel and contract labor $ 35.2 $ 12.0 $ 23.2 $ 22.0 $ 1.2
Network-related 11.5 1.0 10.5 10.6 (0.1)
Service-related 9.4 3.8 5.6 6.8 (1.2)
Commercial 11.6 2.8 8.8 7.0 1.8
Facility, provision, franchise and other 37.8 11.3 26.5 23.1 3.4
Share-based compensation expense 1.1 1.3 (0.2) - (0.2)
Total other operating costs and expenses
$ 74.4 $ 69.5$ 4.9 Increase (decrease) from: Six months ended June 30, Acquisition 2021 2020 Increase (disposition), net Organic in millions Personnel and contract labor $ 67.6$ 22.8 $ 44.8 $ 42.0$ 2.8 Network-related 20.7 2.2 18.5 18.8 (0.3) Service-related 19.8 6.8 13.0 14.5 (1.5) Commercial 23.6 5.4 18.2 14.8 3.4 Facility, provision, franchise and other 83.0 23.7 59.3 56.8 2.5 Share-based compensation expense 4.1 2.6 1.5 - 1.5
Total other operating costs and expenses
146.9 $ 8.4
•Personnel and contract labor: The organic increases are primarily due to higher
salaries and other personnel costs.
•Service-related: We incurred integration costs associated with the AT&T
Acquisition of (i) $2 million and $1 million during the three months ended June
30, 2021 and 2020, respectively, and (ii) $3 million and $2 million during the
six months ended June 30, 2021 and 2020, respectively. The integration costs
incurred during 2021 are included in the increase from an acquisition
(disposition), net, in the above table and are expected to grow significantly in
future quarters.
•Commercial: The organic increases are primarily due to higher call center
volumes, partially attributable to work-from-home and remote learning mandates
resulting from COVID-19.
•Facilities, provision, franchise and other: The organic increases are primarily
due to a $2 million payment to settle certain 2011 property tax claims.
60
--------------------------------------------------------------------------------VTR. The following tables set forth the organic and non-organic changes in other operating costs and expenses for our VTR segment for the periods indicated.
Three months ended June 30, Increase Increase (decrease) from:
2021 2020 (decrease) FX Organic
in millions
Personnel and contract labor $ 16.8 $ 15.9 $ 0.9 $ 2.1 $ (1.2)
Network-related 21.0 16.1 4.9 2.8 2.1
Service-related 9.7 9.2 0.5 1.3 (0.8)
Commercial 22.6 18.7 3.9 2.9 1.0
Facility, provision, franchise and other 9.4 10.6 (1.2) 1.3 (2.5)
Share-based compensation expense 2.0 2.0 - 0.2 (0.2)
Total other operating costs and expenses $ 81.5 $ 72.5 $ 9.0 $ 10.6 $ (1.6)
Six months ended June 30, Increase Increase (decrease) from:
2021 2020 (decrease) FX Organic
in millions
Personnel and contract labor $ 32.9 $ 30.8 $ 2.1 $ 3.7 $ (1.6)
Network-related 40.3 30.5 9.8 4.7 5.1
Service-related 19.8 17.8 2.0 2.2 (0.2)
Commercial 44.9 38.5 6.4 5.2 1.2
Facility, provision, franchise and other 19.4 22.0 (2.6) 2.2 (4.8)
Share-based compensation expense 3.9 3.9 - 0.4 (0.4)
Total other operating costs and expenses
$ (0.7) •Personnel and Contract Labor: The organic decreases are primarily due to lower salary expense as a result of a restructuring program implemented during 2021. •Network-related: The organic increases are primarily due to higher rates associated with network access-related contract labor. •Commercial: The organic increases during the three-month comparison is primarily due to higher sales commissions. The organic increase during the six-month comparison is primarily due to the net effect of (i) a decrease in marketing and advertising expenses, (ii) higher call center volumes and (iii) higher sales commissions. •Facility, provision, franchise and other costs: The organic decreases are primarily due to lower bad debt provisions. Cabletica. The following tables set forth the organic and non-organic changes in other operating costs and expenses for our Cabletica segment for the periods indicated. Three months ended June 30, Increase Increase (decrease) from: 2021 2020 (decrease) FX Organic in millions Personnel and contract labor $ 3.6$ 3.2 $ 0.4 $ (0.4)$ 0.8 Network-related 2.2 2.1 0.1 (0.1) 0.2 Service-related 1.0 0.5 0.5 (0.1) 0.6 Commercial 2.1 2.5 (0.4) - (0.4) Facility, provision, franchise and other 3.4 4.2 (0.8) (0.4)
(0.4)
Share-based compensation expense 0.3 0.2 0.1 - 0.1
Total other operating costs and expenses $ 12.6
$ 0.9 61 --------------------------------------------------------------------------------
Six months ended June 30, Increase Increase (decrease) from:
2021 2020 (decrease) FX Organic
in millions
Personnel and contract labor $ 7.0 $ 8.0 $ (1.0) $ (0.6) $ (0.4)
Network-related 4.3 4.1 0.2 (0.3) 0.5
Service-related 1.8 0.9 0.9 (0.2) 1.1
Commercial 3.9 3.3 0.6 (0.2) 0.8
Facility, provision, franchise and other 6.4 6.9 (0.5) (0.5) -
Share-based compensation expense 0.4 0.4 - - -
Total other operating costs and expenses $ 23.8
$ 2.0
•Service-related: During 2021, we have incurred a minor amount of integration costs related to the pending Telefónica-Costa Rica Acquisition. These costs are expected to grow during the remainder of 2021.
Corporate. The following tables set forth the organic changes in other operating costs and expenses for our corporate operations for the periods indicated.
Three months ended June 30, Organic increase
2021 2020 (decrease)
in millions
Personnel and contract labor $ 9.2 $ 4.8 $ 4.4
Network-related - 0.3 (0.3)
Service-related 3.7 2.8 0.9
Facility, provision, franchise and other 5.0 1.8 3.2
Share-based compensation expense 19.6 12.1 7.5
Total other operating costs and expenses $ 37.5 $ 21.8 $ 15.7
Six months ended June 30, Organic increase
2021 2020 (decrease)
in millions
Personnel and contract labor $ 14.2 $ 10.9 $ 3.3
Network-related - 0.3 (0.3)
Service-related 8.3 5.8 2.5
Facility, provision, franchise and other 11.3 5.5 5.8
Share-based compensation expense 30.7 25.1 5.6
Total other operating costs and expenses $
64.5
•Personnel and contract labor: The organic increases are primarily attributable to higher salaries and other personnel costs mainly resulting from higher staffing levels in the operations center inPanama . •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. 62
-------------------------------------------------------------------------------- Results of Operations (below Adjusted OIBDA) Share-based compensation expense (included in other operating costs and expenses) Share-based compensation expense increased$9 million for each of the three and six months endedJune 30, 2021 , as compared to the corresponding periods in 2020, primarily due to increases in grants awarded to our employees and Directors. For additional information regarding our share-based compensation, see note 14 to our condensed consolidated financial statements. Depreciation and amortization Our depreciation and amortization expense increased$38 million or 17% and$70 million or 16% during the three and six months endedJune 30, 2021 , respectively, as compared to the corresponding periods in 2020, primarily due to the net effect of (i) increases of$29 million and$59 million , respectively, following the closing of the AT&T Acquisition, (ii) decreases associated with certain assets becoming fully depreciated, (iii) 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 and (iv) increases in property and equipment additions, primarily associated with the installation of CPE, baseline related additions and the expansion and upgrade of our networks and other capital initiatives. Impairment, restructuring and other operating items, net The details of our impairment, restructuring and other operating items, net, are as follows: Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 in millions Impairment charges (a) $ 0.6$ 276.9 $ 2.9 $ 278.7 Restructuring charges (b) 13.2 3.3 15.0 12.5 Other operating items, net (c) 3.2 18.5 1.3 26.3 Total $ 17.0$ 298.7 $ 19.2 $ 317.5 (a)The 2020 amounts primarily include goodwill impairment charges of$177 million at C&W Panama and$99 million at various reporting units within the C&WCaribbean 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)The 2021 amounts include (i) for the six-month period, a gain of$9 million on the disposition of certain B2B operations in our Liberty Puerto Rico segment that was completed inJanuary 2021 and (ii) direct acquisition costs. The 2020 amounts primarily include direct acquisition costs related to the AT&T Acquisition. Interest expense Our interest expense decreased$2 million and$19 million during the three and six months endedJune 30, 2021 , respectively, as compared to the corresponding periods in 2020, primarily due to the net effect of (i) lower weighted-average interest rates and (ii) higher average outstanding debt balances. For additional information regarding our outstanding indebtedness, see note 8 to our condensed consolidated financial statements. It is possible that the interest rates on (i) any new borrowings could be higher than the current interest rates on our existing indebtedness and (ii) our variable-rate indebtedness could increase in future periods. As further discussed in note 5 to our condensed consolidated financial statements, we use derivative instruments to manage our interest rate risks. 63 -------------------------------------------------------------------------------- Realized and unrealized gains (losses) on derivative instruments, net Our realized and unrealized gains or losses on derivative instruments primarily include (i) unrealized changes in the fair values of our derivative instruments that are non-cash in nature until such time as the derivative contracts are fully or partially settled and (ii) realized gains or losses upon the full or partial settlement of the derivative contracts. The details of our realized and unrealized gains (losses) on derivative instruments, net, are as follows: Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 in millions Cross-currency and interest rate derivative contracts (a) (b)$ 59.6 $ (173.3) $ 179.1 $ (164.0) Foreign currency forward contracts 4.0 (2.4) 4.7 8.1 Weather Derivatives (c) (6.3) (3.3) (11.6) (5.7) Total$ 57.3 $ (179.0) $ 172.2 $ (161.6) (a)The gains (losses) during the three and six months endedJune 30, 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 theU.S. dollar and (ii) changes in interest rates. These amounts include gains (losses) associated with changes in our credit risk valuation adjustments of ($9 million ) and ($30 million ) for the three and six months endedJune 30, 2021 , respectively, and$7 million and$40 million during the three and six months endedJune 30, 2020 , respectively, which for the 2020 periods are primarily due to increased credit risk stemming from market reaction to the COVID-19 outbreak. (b)The losses during the three and six months endedJune 30, 2020 include a realized gain (loss) of ($106 million ) and$71 million , respectively, associated with the settlement of certain cross-currency interest rate swaps at VTR inJune 2020 that were unwound in connection with theJuly 2020 refinancing of certain VTR debt. (c)Amounts represent the amortization of the 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), 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 June 30, Six months ended June 30, 2021 2020 2021 2020 in millions
$ (27.7)
(34.1) (26.8) (30.9)
Cash denominated in a currency other than an entity's functional currency and other
(6.1) 0.9 (11.2) (7.9)
Total $ (44.4) $ 19.1 $ (69.8) $ (145.2)
64-------------------------------------------------------------------------------- Losses on debt extinguishment We recognized losses on debt extinguishment of nil and$23 million during the three and six months endedJune 30, 2021 , respectively, and nil and$3 million during the three and six months endedJune 30, 2020 , respectively. The losses during 2021 are associated with (i) the write-off of unamortized discounts 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 payment of redemption premiums and the write-off of unamortized deferred financing costs related to the partial redemption of the 2028 VTR Senior Secured Notes. The losses during 2020 are associated with the write-off of unamortized discounts and deferred financing costs associated with the repayment of the C&W Term Loan B-4 Facility. For additional information concerning our losses on debt extinguishment, see note 8 to our condensed consolidated financial statements. Other income (expense), net Our other income and 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, cash equivalents and restricted cash. We recognized other income (expense), net, of nil and ($1 million ) during the three and six months endedJune 30, 2021 , respectively, and$5 million and$12 million during the three and six months endedJune 30, 2020 , respectively. During the 2020 periods, we generated interest income on restricted cash held in escrow in advance of the closing of the AT&T Acquisition. Income tax expense We recognized income tax expense of$38 million and$66 million during the three and six months endedJune 30, 2021 , respectively, and$4 million and$9 million during the three and six months endedJune 30, 2020 , respectively. For the three and six months endedJune 30, 2021 , the income tax expense attributable to our earnings before income taxes differs from the amounts computed using the statutory tax rate, primarily due to detrimental effects of international rate differences, negative effects of permanent tax differences, such as non-deductible expenses, inclusion of withholding taxes on cross-border payments and net unfavorable changes in uncertain tax positions. These negative impacts to our effective tax rate were partially offset by decreases in valuation allowances and the beneficial effects of permanent tax differences, such as non-taxable income. For the three and six months endedJune 30, 2020 , the income tax expense attributable to our loss before income taxes differs from the amounts computed using the statutory tax rate, primarily due to detrimental effects of non-deductible goodwill impairment, increases in valuation allowances and negative effects of permanent items, such as other non-deductible expenses. These negative impacts to our effective tax rate were partially offset by the beneficial effects of international rate differences, net favorable changes in uncertain tax positions, and permanent items, such as non-taxable income. Additionally, during the second quarter of 2020, we closed certain tax audits and, as a result, reduced our uncertain tax positions by$18 million . This amount has been reflected as a discrete tax benefit in our condensed consolidated statement of operations. For additional information regarding our income taxes, see note 13 to our condensed consolidated financial statements. 65 -------------------------------------------------------------------------------- Net earnings (loss) The following table sets forth selected summary financial information of our net earnings (loss): Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 in millions Operating income (loss)$ 160.2
$ (121.2) $ (290.4) $ (182.0) $ (577.2) Income tax expense$ (38.0) $ (3.8) $ (66.0) $ (9.4) Net earnings (loss) $ 1.0$ (500.2) $ 90.4 $ (684.8) 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 loss attributable to noncontrolling interests of$3 million and$2 million during the three and six months endedJune 30, 2021 , respectively, and$107 million and$111 million during the three and six months endedJune 30, 2020 , respectively. Material Changes in Financial Condition Sources and Uses of Cash As ofJune 30, 2021 , we have four primary "borrowing groups," which include the respective restricted parent and subsidiary entities of C&W, Liberty Puerto Rico, VTR and Cabletica. Our borrowing groups, which typically generate cash from operating activities, held a significant portion of our consolidated cash and cash equivalents atJune 30, 2021 . Our ability to access the liquidity of these and other subsidiaries may be limited by tax and legal considerations, the presence of noncontrolling interests, foreign currency exchange restrictions and other factors. 66 -------------------------------------------------------------------------------- Cash and cash equivalents The details of theU.S. dollar equivalent balances of our cash and cash equivalents atJune 30, 2021 are set forth in the following table (in millions): Cash and cash equivalents held by:Liberty Latin America and unrestricted subsidiaries: Liberty Latin America (a)$ 188.5 Unrestricted subsidiaries (b) 222.5 Total Liberty Latin America and unrestricted subsidiaries 411.0 Borrowing groups (c): C&W 534.3 Liberty Puerto Rico 112.8 VTR 247.5 Cabletica 5.5 Total borrowing groups 900.1 Total cash and cash equivalents$ 1,311.1 (a)Represents the amount held byLiberty Latin America on a standalone basis. (b)Represents the aggregate amount held by subsidiaries ofLiberty 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. Liquidity ofLiberty Latin America and its unrestricted subsidiaries Our current sources of corporate liquidity include (i) cash and cash equivalents held byLiberty 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 fromLiberty 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 ofLiberty Latin America and its unrestricted subsidiaries and (iii) proceeds in connection with the incurrence of debt byLiberty Latin America or its unrestricted subsidiaries or the issuance of equity securities byLiberty Latin America . No assurance can be given that any external funding would be available toLiberty 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. InMarch 2020 , our Directors approved the Share Repurchase Program. During the three months endedJune 30, 2021 , the aggregate amount of our share repurchases was$10 million . For additional information regarding our Share Repurchase Program, see note 16 to our condensed consolidated financial statements and Part II-Item 2 Unregistered Sales ofEquity Securities and Use of Proceeds below. Liquidity 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 67 --------------------------------------------------------------------------------June 30, 2021 , see note 8 to our condensed consolidated financial statements. The aforementioned sources of liquidity may be supplemented in certain cases by contributions and/or loans fromLiberty 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 toLiberty Latin America , (iii) capital distributions toLiberty 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 17 to our condensed consolidated financial statements. The Telefónica-Costa Rica Acquisition, which is expected to close bymid-August 2021 , will be financed by a combination of (i) commitments under the existing Cabletica Credit Facilities that are specific to the Telefónica-Costa Rica Acquisition, (ii) existingLiberty Latin America liquidity and (iii) an equity contribution from Cabletica's noncontrolling interest, such that our ownership interest in Cabletica following Cabletica's acquisition of Telefónica S.A.'s wireless operations inCosta Rica will remain at 80%. For additional information regarding the Telefónica-Costa Rica Acquisition, see note 4 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. AtJune 30, 2021 , 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. AtJune 30, 2021 , the outstanding principal amount of our debt, together with our finance lease obligations, aggregated$8,947 million , including$165 million that is classified as current in our condensed consolidated balance sheet and$7,395 million that is not due until 2027 or thereafter. AtJune 30, 2021 ,$8,541 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 atJune 30, 2021 is$172 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 8 to our condensed consolidated financial statements. 68 -------------------------------------------------------------------------------- The weighted average interest rate in effect atJune 30, 2021 for all borrowings outstanding pursuant to each debt instrument, including any applicable margin, was 5.1%. 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 atJune 30, 2021 was as follows: Borrowing group Increase to borrowing costs C&W 0.6 % Liberty Puerto Rico 0.4 % VTR 0.4 % Cabletica 1.2 % Liberty Latin America borrowing groups 0.5 % 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 6.0% atJune 30, 2021 . 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 six months endedJune 30, 2021 and 2020 are summarized as follows:
© Edgar Online, source
