Case Studies

Underwriting VTR in Chile

A key focus of our South American trip was to continue to improve our understanding of the most important markets for the Fund investment in Liberty Latin America (“Liberty LatAm”), which operates in the Caribbean, South America, and Central America.  While in Santiago, we met with the CEO and CFO at the headquarters of VTR, Liberty LatAm’s Chilean subsidiary.  VTR enjoys an outstanding culture, a stout competitive position, and opportunities for growth.  The company has another five-plus years of runway to build out its residential fixed network in the country.  These projects have compelling returns on investment, and the realized penetration on new homes passed is currently ahead of management’s initial expectations.  While not a core strategic thrust, VTR is incrementally improving its mobile offering and successfully reducing customer churn, leading to higher lifetime value.  Lastly, VTR has an opportunity to expand its fixed services into the small and medium business market (to date, the company has focused its fixed networks efforts on residential markets).

We took the picture on the left from a Santiago sidewalk with a VTR store in the foreground and the VTR corporate tower in the background. The picture on the right is David playing with the interactive touchscreen in that store, which asks a series of questions about a subscriber to build a suggestion for the best bundle.

We also traveled to Panama to meet with the COO of Liberty LatAm business in the country, Cable & Wireless Panama.  Cable & Wireless Panama is a bit of a turnaround based on the competitive dynamics in that market, namely the presence of four competitors for mobile services.  Liberty LatAm is transforming the business and is implementing best practices from around the broader Liberty system.  We are optimistic about the way the market will develop over the next few years with reinvestment opportunities in broadband internet, expansion in business-to-business services, and the consolidation of the wireless industry.  In addition, management is rationalizing costs through simple initiatives like moving a regional call center from South Florida to Panama.  Overall, we are pleased with how the Liberty LatAm team is allocating capital and its common-sense decisions to manage operating costs.