LBTCOR 10 7/8 31

About the Company

Liberty Costa Rica and its subsidiaries, such as Liberty Telecomunicaciones, deliver fixed
and mobile telecommunications services to both residential and B2B clients in Costa Rica. Liberty
Costa Rica operates as a fully owned subsidiary of LBT CT Communications SA, an entity that is
80% indirectly owned by Liberty Latin America.
When looking into market share, LBTCOR 31 has ~22% of Fixed Broadband (FBB), ~30%
of the video market, ~5% of the telephony market, and a substantial 42% of the mobile market.
Below, we can see the market share vs peers summary:

On Jan 23, Liberty Costa Rica acquired certain B2B operations in Costa Rica from C&W.
About credit ratings, Moody’s affirmed a B2 rating, and S&P affirmed a B+ rating; both ratings
issued on Jan 23. Liberty Costa Rica represented around 12% of Liberty Latin America total
revenue of 3Q23, as shown below:

Liberty Latin America Revenue by subsidiary

10%
C&W Caribe
12% 31%
Puerto Rico
C&W Panama
17% Liberty Costa Rica
Liberty Networks
30%

Financial Analysis
The company has around 3.1 million mobile users and Balanz estimates that they can
reach ~3.8 million by 2028. Costa Rica population is around 5.2 million (2021).
Revenue depends on:
 (i) changes in the number of RGUs (revenue-generating units) or mobile subscribers
(ii) fluctuations in ARPU (which means average monthly subscription revenue). ARPU
changes result from pricing adjustments, and modifications in bundling or
promotional discounts
(iii) shifts in service tier selection
(iv) variations in subscriber usage patterns, and
(v) changes in the overall mix of fixed and mobile products.
Adjusted OIBDA grew by 52% and 21% on a reported and rebased basis, respectively and
this rebased performance was driven by favorable foreign exchange movements on non-CRC
denominated costs and successful execution of our integration plan.
We can see both Revenue by product and Revenue and OIBDA evolution below:

Revenue by product Revenue & OIBDA Evolution

160
10% 140
120
31%
USD mm

100
80
60
59% 40
20
0
Fixed Mobile B2B 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23

Revenues had a 23% year-over-year growth, influenced by the appreciation of the Costa
Rican colon against the USD. Also, the net debt/EBITDA ratio decreased to 2.1x from 2.2x in
2Q23. The company had been deleveraging lately: in 3Q22, the net leverage was 2.7x.
In 2024, capex is expected to be around 17% of revenues, mainly due to the upcoming
spectrum contest. This cost is reduced because of their business model, where they lease all their
towers.
Key points:
• There is a medium-term risk in company´s fixed infrastructure because of their exposure
(~85%) to HFC technology, which is a technology that combines both optical fiber and coaxial
cable to provide broadband services, like internet, television, and telephone services.

• There is a regulatory initiative to offer an additional frequency band, which goal is to foster fair
competition between telecom peers.
Spread Analysis
LBTCOR 10 7/8 01/15/31 trades at $98.5, 11.17% YTW, with size of $ 400mm. In
October/23, Barclays said to switch from LBTCOR 10 7/8 31s into CWCLN 6 7/8 27s. They prefer
CWCLN due to the slightly shorter duration at 3.2 years versus 4.7 years at LBTCOR, as well as
more diversified operations. CWCLN is also more liquid than LBTCOR.
In the comparison YTD to the Sovereign COSTAR 32, we can see that LBTCOR 31 is
trading in line with the historial spread difference, so Balanz belevies there is a limited upside, as
can be seen below:
z-spread analisys: