Liberty Latin America, the cable and broadband company being spun off from John Malone’s Liberty Global, expects operations in hurricane-hit Puerto Rico to be “back to our new normal” by the middle of 2018, says its new chief executive.
As of mid-December, the company had restored service to 30 per cent of customers in the US territory, said Balan Nair, the former Liberty Global chief technology officer who was recently named to lead its Latin American and Caribbean business, known as LiLAC.
It started trading as an independent company on Tuesday, the completion of a process begun in 2015 when it was launched as a tracking stock ahead of Liberty’s £5.4bn acquisition of Cable & Wireless Communications.
As Mr Nair prepares to take the dealmaking playbook that has made Liberty Global Europe’s biggest cable operator to Latin America in 2018, he is also dealing with the impact of two back-to-back category 5 hurricanes that ravaged the Caribbean in September, leaving power grids and infrastructure in tatters.
“This year is very unique. In 30 years, 100 years, you’ve not seen two category 5 storms hitting closely apart, and both direct hits. This is not business as usual,” Mr Nair said in an interview. “But I’m not daunted by what happened. We experienced severe damage, but we will be back stronger than ever.”
Hurricanes Maria and Irma shaved about US $19m in revenue from Liberty’s operations in Puerto Rico and $3m from its Cable & Wireless Communications business in the third quarter. The company has warned investors that it will continue to see financial effect in the fourth quarter of 2017, when revenue losses in Puerto Rico are estimated at $80m to $100m, and in the first half of 2018. Repairing property and equipment is expected to cost more than $150m, some of which will be covered by insurance policies.
In Puerto Rico, Liberty’s teams are working to restore service as power companies bring operations back online. The company has raised more than $1.8m in relief funds and is providing free WiFi services on the island.
“You can’t time these things,” Mr Nair said. “Headwinds hit you many different ways and at different times in your career and business. This hit us right before our spin. Good businesses are built to withstand these things.”
Mr Nair said he will be “very opportunistic” about potential deals as well as organic growth in the region’s fragmented telecoms market.
“If you look at Latin America, there’s still a lot of hunger for broadband, connectivity and services that is still only 50 per cent met,” he said. “We are quite an entrepreneurial company. We will have our own balance sheet to take advantage of inorganic opportunities for growth.”
Liberty has positioned the demerger as an opportunity for investors to tap higher growth in Latin America, compared to more mature European markets, and as giving the independent business an acquisition currency for future deals.
“Over the last 10 years, we have been building and investing in Europe…Now we can be a leading consolidator” in Latin America, said Mike Fries, Liberty Global’s chief executive, who will serve as LiLAC’s executive chairman.
Mr Fries added that Liberty expects to participate in further deals in Europe as well, as media groups scramble to adapt to new consumer behaviour and demand for connectivity. “There will be a couple of surviving players in every nation — and we will be one of them,” he said.