Liberty Latin America completes US$255mn Puerto Rico deal

Liberty Latin America reinforced its position in Puerto Rico and the US Virgin Islands as it completed the US$255 million acquisition of spectrum from Echostar (formerly Dish) and 85,000 prepaid mobile subscribers. 

Announced in 2023, US regulator FCC approved the deal on August 9 and Liberty reported the completion on Wednesday.

The aggregate purchase price will be paid in four annual installments, with the first $95mn having been transferred.

The company is adding over 100MHz of spectrum, the prepaid subscribers and an extensive distribution network. “We have a tremendous opportunity to leverage our full-service products to drive fixed-mobile convergence penetration from current levels of around 25%,” Liberty Latin America CEO Balan Nair said in a press release.

According to latest official figures, 78% of Puerto Rican broadband connections are mobile and 22% fixed.

In June, Liberty Puerto Rico, which also operates in the US Virgin Islands, had 1.18mn homes passed and 581,700 fixed customers. 

It reported 834,800 mobile subscribers, 739,600 of which were postpaid. The acquisition of Echostar's subscribers will increase the prepaid base from 95,200 to around 180,200. 

Liberty Latin America competes with T-Mobile and America Móvil’s Claro in a market of 3.96mn prepaid and postpaid subscribers, but the latter two do not provide customer numbers for Puerto Rico.

In June, Claro reported 7.7mn mobile customers in the Caribbean, including Puerto Rico and the Dominican Republic. The company also has 2.8mn fixed lines, including broadband, TV and telephony in the region. 

Puerto Rico’s fixed broadband market has 927,250 customers.

“As we ramp up our commercial efforts, there is significant room for growth, and these assets will enable us to add more capacity, increase speeds, further strengthen our 5G mobile network, and grow our scale in the prepaid market,” Nair said. 

Liberty Latin America faced some challenges and high subscriber-migration costs after having acquired AT&T's Puerto Rico operations in 2020. 

“Looking to the second half of the year, we anticipate a significant inflection in financial performance as we move past impacts from our Puerto Rico migration and begin to execute on our growth plans in that market, while maintaining healthy positive momentum across the rest of the group,” Nair said in the recent Q2 report. 

Liberty Puerto Rico’s Q2 sales were US$309mn, down 12% year-on-year, but the company expects an improvement towards the end of the year. Liberty Latin America invested US$89.9mn in the sixth first months of 2024. 

The Echostar acquisition is the third M&A of Liberty Latin America in Puerto Rico and the US Virgin Islands. In 2021, Liberty also acquired 96% of the outstanding shares of Broadband VI for US$33mn.