Digitalization Will Expand Broadband And Streaming In Latin America

Key Takeaways

• Strong subscriber and operational growth, combined with aggressive cost management, positions Liberty Latin America for accelerated revenue, margin, and free cash flow gains beyond expectations.
  
• Strategic infrastructure, business simplification, and innovative product offerings support durable recurring revenue streams and long-term value creation through enhanced shareholder returns.
  
• Intensifying competitive, technological, and financial pressures threaten Liberty Latin America's revenue growth, profitability, and long-term ability to invest and sustain market leadership.

Catalysts

Provides fixed, mobile, and subsea telecommunications services in Puerto Rico, Panama, Costa Rica, Jamaica, Latin America and the Caribbean, the Bahamas, Trinidad and Tobago, Barbados, Curacao, Chile, and internationally.

• While analyst consensus anticipates strong broadband and postpaid mobile growth, recent operational momentum in subscriber additions-particularly triple-digit increases in core markets like Panama, Costa Rica, and Jamaica-suggests Liberty Latin America is on track for even faster-than-expected expansion, which could accelerate revenue, ARPU, and ultimately top-line growth more significantly than anticipated.
  
• Analyst consensus expects cost controls and capital intensity management to gradually lift margins, but Liberty's demonstrated ability to sharply reduce OPEX and P&E spending-reflected in a 23% year-over-year increase in adjusted OIBDA less P&E and major margin gains in key segments-signals potential for much more rapid margin expansion and improved free cash flow than market expectations.
  
• Liberty's wholesale and subsea infrastructure, with 50,000 kilometers of network reaching over 30 countries, is uniquely positioned to capture the region's surge in bandwidth demand from cloud, streaming, and IoT, which is likely to drive durable recurring B2B revenues and meaningful adjusted OIBDA improvements for years to come.
  
• The planned separation of Liberty Puerto Rico will not only reduce consolidated leverage and unmask underlying group cash generation, but will also create a structurally simpler, lower-risk business that is likely to support a step-change in shareholder distributions such as recurring dividends and buybacks, accelerating long-term earnings power and equity value.
  
• With structural revenue headwinds fading and newly launched customer value propositions-such as mobile financial services, OTT partnerships, and AI-driven product bundling-Liberty is poised to benefit from rising disposable incomes and middle-class expansion, driving both upselling and cross-selling opportunities that will support sustained ARPU expansion and net margin growth.

Liberty Latin America Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Liberty Latin America compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Liberty Latin America's revenue will grow by 4.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -26.6% today to 6.5% in 3 years time.
• The bullish analysts expect earnings to reach $324.0 million (and earnings per share of $1.33) by about September 2028, up from $-1.2 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 13.3x on those 2028 earnings, up from -1.3x today. This future PE is lower than the current PE for the US Telecom industry at 15.2x.
• Analysts expect the number of shares outstanding to grow by 1.73% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.21%, as per the Simply Wall St company report.

Liberty Latin America Future Earnings Per Share Growth

Risks

• The company's legacy cable and HFC network segments face long-term demand risks as emerging market consumers increasingly leapfrog to new digital infrastructure, such as LEO satellite broadband and 5G fixed wireless access, which could reduce organic revenue growth and limit Liberty Latin America's ability to justify further network investment, thereby placing long-term pressure on revenue and capital returns.
  
• Heightened competition from global players and Big Tech ecosystem bundling threatens to drive down average revenue per user and compress margins, with company commentary about increased retention discounts and competitive offers in key markets such as Costa Rica reflecting this structural challenge, potentially undermining both topline growth and profitability.
  
• Economic fragility and rising income inequality across the company's core Caribbean and Latin American markets can contribute to greater churn, increased bad debt, and reduced willingness to pay for premium telecom services; these trends are already visible in lingering B2B payment delays and higher bad debt expenses, which together pressure both net margins and revenue stability.
  
• Persistently high U.S. dollar-denominated debt and the ongoing unsustainable capital structure in Liberty Puerto Rico expose the group to significant foreign exchange risk and refinancing uncertainty, especially with near-term maturities and a debt leverage of 7.9 times in Puerto Rico, threatening future earnings, interest expense, and overall financial flexibility.
  
• The need for sustained network modernization is acute, yet capital intensity has been reduced in recent periods and portions of the business reported underinvestment relative to regional peers; if cost-cutting continues to outweigh investment, Liberty Latin America risks long-term market share erosion, deteriorating network perception, and stagnation in both revenue growth and earnings power.

Valuation

• The assumed bullish price target for Liberty Latin America is $14.9, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Liberty Latin America's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $14.9, and the most bearish reporting a price target of just $6.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $5.0 billion, earnings will come to $324.0 million, and it would be trading on a PE ratio of 13.3x, assuming you use a discount rate of 11.2%.
• Given the current share price of $7.73, the bullish analyst price target of $14.9 is 48.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.