Liberty Latin America (LILA) Q4 2025: Adjusted EBITDA Less Capex Surges 27% Amid Resilient Recovery and Margin Expansion
Liberty Latin America’s 2025 results reveal a business balancing robust cost discipline and margin expansion against significant operational recovery, especially in hurricane-impacted Jamaica. The company’s focus on fixed-mobile convergence, B2B growth, and disciplined capital investment is driving improved cash generation, with a clear path to further margin gains and free cash flow expansion in 2026. Shareholder returns and equity unlock are increasingly in focus as the group stabilizes key markets and executes on major infrastructure projects.
Summary
- Margin Expansion Drives Cash Generation: Cost discipline and lower capital intensity boost adjusted EBITDA less capex, supporting future shareholder returns.
- Operational Resilience in Challenging Markets: Jamaica’s rapid mobile recovery and B2B momentum offset natural disaster and legacy headwinds.
- Strategic Projects and Partnerships Set Up 2026: Major network builds and AWS partnership position LILA for long-term growth and digital transformation leadership.
Performance Analysis
Liberty Latin America (LILA) delivered a year marked by strong margin progression and operational resilience, even as headline revenue remained flat on a rebase basis at $4.4 billion. The group’s adjusted EBITDA rose 9% for the full year, with Q4 up 8% year-over-year, despite the $27 million adverse impact from Hurricane Melissa in Jamaica. This margin expansion was underpinned by aggressive cost control and disciplined capital investment, with P&E additions (property and equipment capex) falling to 14% of revenue, down two points from last year.
Adjusted EBITDA less P&E additions—a key cash metric—jumped 27% for the year to $1.1 billion, reflecting the company’s focus on translating operational gains into free cash flow. Free cash flow before partner distributions climbed 29% to $150 million, with a notable $278 million in Q4, partly helped by $81 million in hurricane insurance proceeds. Segment performance was mixed: Liberty Caribbean faced storm-driven disruption but posted resilient mobile growth, Panama and Liberty Networks delivered double-digit EBITDA gains, while Puerto Rico stabilized after a challenging migration period.
- Jamaica Recovery: Mobile subscriber and revenue metrics rebounded strongly post-hurricane, though fixed broadband restoration remains ongoing and will weigh on near-term results.
- Panama and Liberty Networks Growth: Panama’s postpaid and B2B momentum, plus Liberty Networks’ wholesale infrastructure wins, drove double-digit segment growth.
- P&E Reduction: Capital intensity fell to 14% of revenue, a clear signal of disciplined investment and improved asset utilization.
While top-line growth remains modest, the underlying story is one of margin expansion, improved cash conversion, and operational stabilization across diverse regional markets.
Executive Commentary
"Our business performed very well in 2025. We added over 225,000 mobile post-paid subscribers across the group, notably driven by Costa Rica, and supported by fixed mobile convergence efforts and continuing prepaid to postpaid migrations. This performance was driven by good execution of cost initiatives, as well as effective customer management, and came despite headwinds in the fourth quarter from Hurricane Melissa."
Balan Mair, Chief Executive Officer
"For Q4, we delivered revenue of $1.2 billion, reflecting 1% year-over-year rebase growth. This was fueled by double-digit top-line growth at Liberty Networks and CWP, offset in large part by declines in LC, principally due to the hurricane, and LPR as a result of the year-over-year decline in customers. For LLA, our operating focus on cost control and efficiency contributed to our roughly 300 basis point improvement in adjusted EBITDA margins in 2025."
Chris Noyes, Chief Financial Officer
Strategic Positioning
1. Fixed-Mobile Convergence (FMC) as Core Growth Lever
FMC, the integration of fixed broadband and mobile services, is now central to LILA’s commercial strategy. Penetration is nearing 40% group-wide, with strong tailwinds from prepaid to postpaid migration. The approach is driving higher ARPU (average revenue per user) and reducing churn, particularly in prepaid-dominant markets like Costa Rica and Jamaica. Management sees substantial runway for further FMC-driven growth, especially as systems integration in Puerto Rico unlocks cross-selling potential.
2. B2B and Cloud Services Expansion
B2B, business-to-business solutions, now account for nearly one-third of group revenue. The segment is benefiting from cloud migration, government contracts (such as Panama’s public school connectivity), and new enterprise offerings. The AWS partnership is expected to accelerate cloud adoption and AI integration, both internally and for customers, creating new revenue streams and operational efficiencies.
3. Infrastructure and Network Investments
Major projects—including the El Salvador submarine cable and the Manta build—are positioning Liberty Networks as a regional data hub. These projects are front-loaded on capex but are expected to generate recurring, high-margin revenue and underpin long-term growth. The company is also investing in 5G rollouts across multiple markets, with over 300,000 5G customers in Costa Rica and launches completed in Puerto Rico, Panama, and Caribbean islands.
4. Operational Turnarounds in Challenged Markets
Puerto Rico’s stabilization after customer migration and Jamaica’s rapid mobile recovery post-hurricane highlight LILA’s ability to execute operational turnarounds. In both cases, leadership changes, product innovation, and customer experience improvements are reversing negative trends and setting up for future growth.
5. Cost Discipline and Capital Allocation
Disciplined cost management remains a strategic priority, with group-wide cost-out programs and capex discipline supporting margin expansion. Management is signaling increased focus on shareholder returns and potential equity unlock as free cash flow improves.
Key Considerations
Liberty Latin America’s 2025 results reflect a company in active transformation, balancing near-term operational recovery with long-term investment in digital infrastructure and service innovation. The group’s ability to manage through natural disaster, competitive pressures, and legacy headwinds while expanding margins and cash generation is central to its investment case.
Key Considerations:
- Margin Expansion Outpaces Revenue Growth: Cost initiatives and lower capital intensity are driving cash flow, even as top-line remains flat.
- Jamaica’s Fixed Recovery Will Be Gradual: Mobile is back online, but fixed broadband restoration will take several quarters, impacting reported results in 2026.
- B2B and Cloud as Growth Vectors: New enterprise contracts and the AWS partnership are expanding the company’s revenue base and supporting digital transformation.
- Puerto Rico’s Turnaround Remains Fragile: While stabilization is underway, leverage remains elevated and further commercial execution is required to regain market share.
- Capital Structure and Leverage Dynamics: Consolidated net leverage improved to 4.3x, but Puerto Rico remains a watchpoint due to high leverage and potential liquidity needs.
Risks
Key risks include execution delays in post-hurricane Jamaica recovery, ongoing competitive and pricing pressure in fixed broadband, and operational challenges in Puerto Rico where leverage is high and liquidity may require additional action. Large infrastructure projects (e.g., Manta, El Salvador cable) carry execution and demand risk, while macro volatility and regulatory changes could impact B2B and consumer demand. Management’s margin and cash flow gains must be sustained amid these uncertainties.
Forward Outlook
For Q1 2026 and the full year, LILA expects:
- Financial performance heavily weighted to the second half of 2026, as Jamaica’s fixed recovery and major project execution ramp up.
- Continued focus on cost discipline, margin expansion, and free cash flow improvement, with adjusted FCF impact from the storm estimated at $100 million in 2026.
Full-year 2026 guidance was not explicitly provided, but management highlighted:
- Targeting a return to near pre-hurricane profitability in Jamaica by year-end 2026, with full recovery in 2027.
- Ongoing investment in high-return projects, 5G rollout, and digital transformation initiatives.
Management emphasized that shareholder returns and equity unlock will be a focus as free cash flow generation improves, with potential announcements expected during the year.
Takeaways
LILA’s 2025 performance demonstrates a business in transition, leveraging operational discipline and strategic investment to drive margin and cash flow gains despite external shocks.
- Margin and Cash Flow Story: Cost control and capex discipline are translating into robust cash generation, even as revenue growth remains muted.
- Strategic Execution Across Markets: Operational turnarounds in Jamaica and Puerto Rico, combined with B2B and infrastructure wins, are setting the stage for a stronger 2026-2027.
- Investor Watchpoints: Track progress in Jamaica’s fixed recovery, Puerto Rico’s commercial stabilization, and the ramp of major network projects for forward momentum.
Conclusion
Liberty Latin America exits 2025 with clear evidence of operational resilience, margin expansion, and improving cash flow, offsetting top-line stagnation and external shocks. The company’s focus on fixed-mobile convergence, B2B/cloud growth, and disciplined investment supports a credible path to long-term value creation, while near-term execution in Jamaica and Puerto Rico remains key for risk management and upside realization.
Industry Read-Through
LILA’s results underscore the importance of margin expansion and disciplined capex in mature or disrupted telecom markets, especially where top-line growth is constrained by legacy declines or macro shocks. The pivot to fixed-mobile convergence, B2B/cloud partnerships, and regional infrastructure projects reflects a broader industry trend toward integrated digital services and recurring revenue models. Operators facing similar external shocks or legacy headwinds will note LILA’s focus on cost discipline, operational turnaround, and value unlock as critical levers in today’s telecom landscape.