Liberty Global's Latin American and Caribbean telecommunications business -- known as LiLAC Group (NASDAQ: LILAK) -- reported earnings after the market closed on Monday and continues to improve its business after integrating the CWC acquisition. And in the coming months, it will probably be spun out from Liberty Global altogether.
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Here's a look at the numbers for the quarter and what's driving the company's performance.
LiLAC Group: The raw numbers
|Metric||Q2 2017||Q2 2016||Year-Over-Year Change|
|Sales||$920.9 million||$602.9 million||52.7%|
|Operating cash flow (OCF)||$368.0 million||$231.1 million||59.2%|
|Free cash flow||$114.0 million||($35.3 million)||N/A|
What happened with LiLAC Group this quarter?
The acquisition of Cable & Wireless Communications (CWC) with just a couple of weeks left in Q2 2016 gave the 2017 financials quite a boost. Here are some notable numbers from the quarter.
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- Organic subscriber additions were 8,000 in the quarter and 41,000 for the first half of the year. Total subscriber additions were 16,000 in the quarter and 58,000 in the first half of 2017.
- Revenue rebased into dollars before accounting for currency fluctuations showed growth of 2%, highlighted by 8% growth in Chile.
- Rebased operating cash flow growth was 10.5% because of improvements in the VTR and CWC businesses, and management hopes to transition those businesses from either losing or maintaining customers to growing revenue on their own in the future.
- Data subscriber growth led the charge with 23,200 in the quarter, while video added 6,300 users and voice lost 13,800.
- Chile's user growth was 33,800, while CWC and Puerto Rico lost 15,600 and 2,500, respectively.
What management had to say
The focus for LiLAC has been on turning existing revenue into strong cash flow, rather than just relying on user growth. Integrating the CWC business probably took longer than management originally expected. But now, CEO Mike Fries said, "driven by our product investments and evolving go-to-market strategies ... we continue to anticipate approximately $1.5 billion of OCF for full-year 2017."
But more organic growth may be on the horizon if LiLAC Group becomes an independent company.
The biggest news may be that Liberty Global is planning to spin off the LiLAC Group and has filed a draft registration statement with the SEC. If all goes according to plan, the company will be completely spun out of Liberty Global by the end of the year, which will give it independence in financing its business and driving growth.
Watch for more announcements on LiLAC Group's registration and public offering. It could give the company more freedom to grow without being under Liberty Global's wing.
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