LILA

Analyst Note: Liberty Latin America Ltd. (LILA)

Date: 2026-06-13 Current Price: $5.30

1. Structural Readiness

• Conservative Entry: Not yet defined (requires confirmed breakout above the coil high).
• Aggressive/Pre-Breakout Entry: $5.30 (Current Price).
• Breakout Level: Not yet defined (requires price to close above the coil resistance).
• Extension: Not applicable (price is within the coil range).
• Current ATR: 7.7% (Very High).
• *Context:* This volatility level is elevated relative to the historical "sweet spot" (4–6%), indicating significant price noise and higher risk for position sizing during the forming phase.

2. Thesis Layer

• Thesis Classification: Tactical / Setup-Led.
• Macro Thesis: There is no named secular thesis attached to this setup as of 2026-06-13.
• Judgment Framework: The investment case must be judged strictly on the quality of the technical setup (the forming coil) and the immediate business fundamentals (cash flow recovery, subscriber growth, and capex normalization). Do not invent a macro narrative; the conviction rests on the company's ability to execute its stated operational turnaround and the technical structure holding.

3. Business Overview

Liberty Latin America Ltd. is an international provider of fixed, mobile, and subsea telecommunications services operating across over 20 countries in Latin America and the Caribbean.

• Segments: The company operates through Liberty Caribbean & C&W Panama, Liberty Puerto Rico, and Liberty Costa Rica.
• Network Scale: As of March 31, 2026, the company owned and operated fixed networks passing 4,748,900 homes and served 6,809,100 mobile subscribers. Fixed-line services include broadband (1.75M subscribers), fixed-line telephony (1.2M), and video (903K).
• Recent Performance (Q1 2026):
• Subscriber Growth: Added 50,000 mobile postpaid subscribers across all segments (E1).
• Financials: Reported $405 million of adjusted OIBDA (E2).
• Headwinds: Revenue and OIBDA were negatively impacted by Hurricane Melissa, with estimated losses of $12 million in revenue and $13 million in OIBDA for the quarter (E12, E13). Management expects these lower revenue impacts to persist through the remainder of 2026 relative to the pre-hurricane 2025 period (E12).
• Strategic Initiatives:
• Manta Project: Currently in the build phase through 2027. Management expects elevated CapEx and working capital through the go-live date, after which CapEx will drop to low run-rates, and high-margin revenue/OIBDA/free cash flow will begin booking (E4).
• Starlink Partnership: Liberty Costa Rica and Starlink signed an agreement to offer direct-to-cell service in Costa Rica (E5).
• Capital Return: Announced intent to dividend 9% cash pay preferred stock with a notional amount of $500 million to equity shareholders (E8).
• Network Extension: Passed or upgraded approximately 0.8 million homes/commercial premises over the past three years, with 170,000 homes upgraded in 2025 alone (E17, E18).

4. Archetype and Conviction

• Archetype: Deep Value Recovery.
• *Fit:* The setup aligns with a deep value recovery narrative driven by a cyclical bottom in hurricane impacts, a transition from high CapEx (Manta build) to high FCF generation, and a return of subscriber momentum. The low price ($5.30) relative to the asset base and the announced $500M dividend intent suggest a valuation reset is underway.
• Valuation Context:
• Forward consensus EPS for FY1 is -0.27, while FY2 is projected at 0.29333 (E30). This indicates a transition from a loss-making year (likely due to hurricane impacts and Manta CapEx) to profitability in the following year.
• Conviction Stack:
• Thesis Strength: Moderate. The "Tactical" nature means there is no external secular tailwind to lean on; the case relies entirely on internal execution.
• Evidence Quality: High. The evidence base is robust, citing specific subscriber counts, OIBDA figures, and management guidance on the Manta project and hurricane impacts.
• Rerating Potential: High, contingent on the Manta project reaching go-live and the stabilization of hurricane-related revenue.

5. Invalidations, Strengtheners, and Gaps

• Strengtheners: A confirmed breakout above the coil resistance (price action) combined with management reiterating the FY2 EPS guidance of $0.29 or higher. Successful execution of the Starlink direct-to-cell launch in Costa Rica would also be a positive catalyst.
• Gaps in Evidence:
• CapEx Run-Rate: While management states CapEx will drop to "very low run-rate levels" post-2027, the specific dollar amount or percentage of revenue is not quantified in the provided text.
• Hurricane Recovery Timeline: Management expects lower revenue "through the remainder of 2026," but the specific month-by-month recovery path is not detailed.

PRIVATE ANALYST CALL

Judgment: Speculative Confidence: medium Key evidence: Added 50,000 mobile postpaid subscribers in Q1 2026; Reported $405 million adjusted OIBDA; Announced intent to dividend $500 million cash pay preferred stock; Manta project expected to transition to high-margin FCF generation post-2027. Key risks: Hurricane Melissa impacts persisting through remainder of 2026; Elevated CapEx and working capital requirements during Manta build phase through 2027; Very high ATR (7.7%) indicating elevated volatility and potential for false breakouts; FY1 consensus EPS remains negative (-0.27). Sizing hint: Position size should be reduced relative to historical norms due to the "Very High" ATR and the "Forming" (unconfirmed) nature of the setup. Expected path: Management expects diminishing year-over-year headwinds and revenue growth to resume in the second half of 2026, with the Manta project driving a structural shift to free cash flow generation starting in 2027. Expected horizon: 12 to 18 months for the Manta project to reach go-live and for the financial spine to reflect the transition to positive EPS.