Liberty Latin America Ltd. (NASDAQ:LILA) Q3 2023 Earnings Call Transcript

So that went away. That was quite a hit to us. So I think if you normalize for some of the things across LLA as well, we actually grew more than 1%. And that’s why I feel really good about the OIBDA contribution margin has expanded and so you would normally look at it, operating wise, about a 3% growth and the top line of 10% growth on the bottom line, which is kind of a healthy way to run an operation.

Michael Rollins: Thank you very much.

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

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

Balan Nair: Sure. Thanks for those questions. So the decision to expand the migration was — we made that decision in the September time frame — August, September time frame. And at that point, we were still hoping that we could close some of it. And let me give you a little bit of color to this migration. The migration is made up of multiple migrations. So we have windows between us and AT&T where each window — and the window is a day where we can actually push subscribers through. So it’s really kind of like if you think of a regular basis, a put out. So it would be a port out from AT&T and a port into ourselves. So that’s kind of like the migration. And we were anticipating to do about 10,000 a day in that migration in each window.

And over the period, we’ve discovered two things. One, there was a whole bunch of folks that we would want to migrate. We decided not to migrate because of the handset issues. These guys some were not on the right releases. And even with the iPhones, not just the Android, we have a feature of voice over Wi-Fi when you get to your room into your house, you go to over Wi-Fi. That specific feature on our stack required a software release of like 16.5 and above. And a lot of iPhones, a lot of users have not migrated to that software release. So as we learn all of these things, we said, okay, do we optimize for our customer, just ran everything through or do we optimize for the experience of our customers. And we said, let’s optimize the experience of the customers, not only because we’re such good guys or anything.

But if it’s a terrible experience, your chain is going to really mess you up. So we optimize for, let’s make this as smooth as passable. And we went back to AT&T and said we needed more windows. The problem — the second problem than it is, then we were getting to Thanksgiving, we were getting through Christmas holidays, and then, of course, there was the iPhone 15 launch in September, which AT&T shut down all the windows. Rightfully so, we didn’t argue with them. We just said, okay, now we’ve lost 14 windows, because of the iPhone 15. There we lost last like a whole bunch of windows, almost 14 windows during the Thanksgiving period. We’re going to lose like almost 18 windows during Christmas. And then when you do the math, you go, okay, let’s methodically do this, we’ll need to get into January and February.

We think we’re going to beat the April time line, but we want to make sure that we have enough runway and get to the end of April and get this thing done methodically, but if you do the backward math in January, February, March and April and the number of windows we have, we’re going to like easily close this. And our engineering teams, our operating teams, a whole bunch of people are just working really hard on all facets of this. Setting up a new network, turning up a whole new IT stack. It’s quite unusual in the migration. Usually, you’re migrating customers to your own billing system because you buy a company and it comes with a mobile core and everything. In this case, you didn’t get that from AT&T. AT&T still supported us on the network.

We have the radios. We own the radios, we own the towers, but we didn’t have the core. And then we have to stand up a whole new mobile stack because we didn’t have a mobile network in Puerto Rico. And the other complexity is we couldn’t use any of our other IT stacks or core from the rest of our network because Puerto Rico is part of the United States, and we have a whole bunch of U.S. regulations and U.S. privacy and security laws that we have to comply with that puts us in kind of a situation where our core has to be Puerto Rico and our redundancy in Miami, as an example. So we could not use any of our other elements. This thing is really complex. But I tell you, I’m really proud of the team. I’ve been on many — I used to be a CTO and you can talk to any of the CTOs in North America, Europe or Asia, when you run one of these IT migration projects.