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Liberty Latin America (LILA 1.11%) (LILAK)
Q4Â 2019 Earnings Call
Feb. 20, 2020, 9:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, ladies and gentlemen, and thank you for standing by. Today's call is being recorded. I will now turn the call over to Guillermo Ponce, CEO of VTR. Please go ahead.
Guillermo Ponce -- Chief Executive Officer-VTR
Good morning and welcome to Liberty Latin America's full year 2019 investor call. At this time, all participants are in listen-only mode. Today's formal presentation materials can be found under the Investor Relations section of Liberty Latin America's website at www.lla.com. Following today's formal presentation, instructions will be given for a question-and-answer session. As a reminder, this call is being recorded.
Today's remarks may include forward-looking statements, including the Company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical fact. Actual results may differ materially from those expressed or implied by these statements. Additional information on factors or risks that could cause results to differ is available in Liberty Latin America's most recently filed Form 10-K. Liberty Latin America disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based.
In addition, on this call, we will refer to certain non-GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation and on our Investor Relations website.
I would now like to turn the call over to our CEO, Mr. Balan Nair.
Balan Nair -- President, Chief Executive Officer and Director
Thank you, Guillermo, and welcome everybody to our full year results presentation. As always, I'm joined by my senior leadership team from across the region, and I'll get them involved as needed during the Q&A, following our prepared remarks.
I'm going to start by taking you through our highlights and operating results for the year, before finishing with a strategic update. Chris Noyes, our CFO, will then follow with a review of our financial performance and outlook for 2020. After that, we'll get straight to your questions. As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com.
Now, starting on Slide 4 with our key highlights for the year. We generated record operational results in our fixed business with 283,000 RGU additions, which was 50% higher than in 2018 and driven by the strength of our leading broadband products. Our mobile momentum has improved significantly as well, thanks to new propositions and a renewed focus from our teams. Compared to 2018, where we reported large subscriber losses, we added 124,000 mobile subscribers in 2019, which was a positive swing of 256,000.
We also delivered our financial guidance for the year, and I'm happy to say that. And this included our OCF, our P&E to revenue ratio and adjusted free cash flow. Our strong adjusted free cash flow performance of $223 million comfortably beat the increased target we had set halfway through the year. Chris will give you more details later.
We continued to expand and strengthen our fixed and mobile networks with nearly 0.5 million new or upgraded homes, and our LTE coverage moved above 90%. Importantly, we continued to invest but with a discipline view on returns, which helped improve our capex to sales ratio in 2019.
Finally, we have made great progress with our inorganic strategy. The integration of UTS is progressing well. We completed the disposal of our Seychelles business. And we are looking forward to completing the acquisition of AT&T's assets in Puerto Rico and the US Virgin Islands.
In the next three slides, I will cover our three business segments of fixed, mobile and B2B. On Slide 5, we show our fixed business, which represents half of our total revenue. As a group, we delivered 91,000 more RGU additions in 2019 than the prior year with good performances across our reporting segments.
Cable & Wireless continues to be an improving story, particularly in fixed, with Panama, Jamaica and Trinidad driving 125,000 additions in 2019. All three are growing markets and the largest operations in C&W. As we focus on our fixed networks, we have significant opportunities as the market expands and we drive increased penetration.
VTR/Cabletica reported strong additions in Chile, which was over 50% higher year-over-year, as well as in Costa Rica where improved speeds and enhanced products continue to resonate well in a growing market. And in Puerto Rico, our 2019 additions were in line with the prior year, which was a good performance, as 2018 included increased additions related to the hurricane recovery.
Looking to the right-hand side, from a product perspective, broadband was once again the main driver of additions, representing nearly two-third of the total. Video represented nearly a quarter of additions, as customers in our region continue to value it as an important part of their bundle.
Moving to mobile in Slide 6, representing just under 20% of our revenue. In Q4, we added 57,000 subscribers across the group, a significant improvement year-over-year. As anticipated, our revitalized propositions in Jamaica drove improved performance at C&W, while VTR continued to add subscribers at a consistent rate. For the full year, we delivered a positive swing of over 250,000 net adds, with a similar story of Jamaica net adds with 139,000 in the year and Chilean growth being the main drivers.
Panama and the Bahamas saw year-over-year improvements in subscriber trends, and we continue to see signs of stabilization in mobile subscription revenue for C&W overall. We focus on bringing fastest speeds to our customers. And on the right-hand side, you can see, we now have leading networks with LTE subscribers growing strongly year-over-year, reaching 50% of our subscribers at the end of 2019.
Moving to Slide 7 and our B2B business, representing about 30% of our revenue. Starting with the left side of the slide, B2B delivered a good performance in Q4 and the full year with rebased growth of 7% and 5% respectively. We had a particularly strong Q4 with some significant contract wins across the group, notably in Panama, the Bahamas and our networks business. This is a testament to our leading combination of fixed, mobile and subsea networks, aligned [Phonetic] to an extensive product portfolio and strong customer service.
As in prior quarters, our B2B business continues to grow steadily, driven by increasing demand for data and managed services, partly offset by legacy product shipments. The graphic in the center of the slide shows that the majority of our B2B revenue comes from C&W markets, including our subsea operations. As part of our efforts to integrate operational capability across LLA, we see significant opportunity to drive greater market share in VTR, Liberty Puerto Rico and Cabletica.
Turning to Slide 8, I wanted to spend a moment on our leading networks and the steps we are taking to drive innovation, which we believe is one of our competitive advantages. Looking at our networks first, in fixed, we added over 490,000 new or upgraded homes in 2019. It's important to note that 85% of our 7.5 million homes passed have access to leading speeds comparable to global benchmarks, either through HFC or fiber-to-the-home technology. We are also focused on layering a leading in-home connectivity experience on the network through great Wi-Fi coverage. We deliver this through our modern technology and mesh network which we offer our customers. Nearly 60% of our customers in Puerto Rico and over 80% in Chile have access to our high-speed modems. As with fixed, the strength of our mobile network is crucial, and we now have LTE coverage to more than 90% of the population in our markets.
Moving to the right of the slide and our commitments to innovation, enabling us to deliver the services our customers' desire. In addition to a differentiated in-home Wi-Fi experience, we have also highlighted our new Android-based Hub TV offering, which we recently soft launched in Puerto Rico and will be rolling out across our markets as part of our single video product strategy. Hub TV is a product that serves as a central video content aggregator with access to apps, OTT content and traditional IP video, all with a sophisticated recommendation engine and Google Assistant.
Turning to Slide 9 and our focus on operations. I first talked about our operational transformation a year ago. And since then, we've made significant progress. Starting on the left-hand side of the slide, we have now established our new operations center in Panama. One of the biggest opportunities to grow our business comes from maximizing scale by creating efficient and effective operations. We chose Panama as the location for our new scalable, regional operations center as this was opened in July 2019. We are on track to have approximately 200 employees there by the end of 2020, and members of my executive team have already relocated there. Our operating model also allows us to scale key initiatives in our operations center like our digital transformation, our product development and mobile engineering. In addition, we have our finance and HR back offices there.
Moving to the center and right of the slide, we've significantly improved results across a number of important operational metrics, as we focus on sharing best practices. On the slide, we've highlighted mean time to install, mean time to repair, number of truck rolls and install early life failure, which is an important metric as it speaks to the quality of our installation, product and drives customer experience, while reducing truck rolls. The next step on our journey is to leverage our digital platforms and leading products to improve sales and customer experience. Reaching our ultimate vision is a multi-year project. But we continue to make progress toward our goal of creating a differentiated and leading proposition in the region.
On Slide 10, I wanted to close by running through our achievements in 2019 and focus areas for 2020. I think the results here speak for themselves and summarize my previous slides. As we look to 2020, there is a mixture of continuity as we executed against our strategic priorities, as well as some new opportunities for us to drive additional growth.
First, we will build on the unified structures and culture in the group to share and scale our expertise across the region. Second, we will continue to expand and innovate, while focusing on capital efficiency. In terms of our fixed footprint, we intend to build or upgrade approximately 0.5 million homes in 2020. Third, as covered in the previous slide, we will ramp up our Panama operations center, leading to efficiency gains. Fourth, we expect to complete the acquisition of AT&T's Puerto Rico and the US Virgin Islands businesses and begin integrating them into our group. A couple of points to note here. We continue to expect the transaction to close in Q2 2020. We expect to incur the majority of integration costs within 18 months of completion. Synergies benefiting OCF are expected to start coming through from about a year after closing, totaling approximately $70 million when fully realized.
Finally, Chris has made great progress with our balance sheet over the past year, and we will continue to look for opportunities to strengthen our position. Overall, we made good progress against our strategic priorities and delivered on our financial guidance in 2019. As we look to 2020, we are focused on continuing to deliver organic momentum and making a successful start in our integration of the AT&T assets. These steps should set the foundation for continued growth and adjusted free cash flow development in the coming years.
With that, I'll now pass you over to Chris Noyes, our Chief Financial Officer, who will talk you through our financial performance before we take your questions. Chris?
Chris Noyes -- Senior Vice President, Chief Financial Officer
Thank you, Balan. I will begin on Slide 12 and summarize our financial results. Starting with the upper left, we reported Q4 revenue of $975 million and 2019 revenue of $3.87 billion. These results reflect rebased growth of 3% for Q4 and 2% for 2019, as subscriber momentum and improved B2B traction are fueling top line advancement.
Moving to OCF, we posted $409 million or a 2% rebased decline for Q4 and $1.54 billion or 4% rebased growth for the full year. Our Q4 rebased performance was adversely impacted by a $64 million insurance recovery benefit realized in Q4 2018. P&E additions totaled $722 million or 19% of revenue for 2019, including $229 million or 24% of revenue for Q4. The relatively higher spend in Q4 includes $16 million of restoration costs related to Hurricane Dorian in the Bahamas.
Moving to the bottom right, we generated $103 million of adjusted free cash flow in Q4, bringing our 2019 total to $223 million and comfortably beating our guidance for the year. Our strong Q4 result was supported by favorable trade working capital movements, including robust collections within Cable & Wireless at the end of the year. In particular, we achieved some collections from larger B2B and government customers earlier than we had previously expected, and thus, we would expect to see some trade working capital unwind in our Q1 2020 cash flows.
On Slide 13, we present our segment results, and I'll call out a few key figures, starting with C&W. A highlight for us was our Q4 revenue and OCF rebased growth of 3% and 13% respectively, both of which were our best results since the acquisition of C&W in Q2 2016. With respect to our revenue growth, a strong result in B2B, coupled with growth in residential fixed, was only partially offset by a rebased decline of just 2% in mobile, which was a substantially better mobile performance than our most recent quarters.
Our strong rebased OCF performance was supported by the aforementioned revenue growth as well as the benefit from reduced content costs, including the favorable impact of new programing agreements and a decrease in withholding taxes associated with third-party suppliers. These positive factors on the Q4 OCF growth rate were partly offset by the recognition of $13 million in insurance settlements in Q4 2018 and the adverse impact attributable to Hurricane Dorian in Q4 2019.
Moving to VTR/Cabletica, we delivered a solid Q4 and full year performance with rebased OCF growth of 6% and 5% respectively, despite the unrest in Chile and associated weakness of the Chilean peso. Finally, on the right of the slide, Liberty Puerto Rico delivered fantastic results. OCF for the year was once again above $200 million with the margin approaching 50%. The Q4 rebased growth of negative 43% was entirely attributable to the benefit from the Puerto Rican portion of the insurance settlement referred to on the prior slide.
Moving to Slide 14, we wanted to highlight the progress we have made on several important metrics since the split-off two years ago. We have reduced our direct costs by 140 basis points and our operating costs by 80 basis points, both measured as a percentage of revenue. These have contributed to an OCF margin uplift of 220 basis points. As our margin has improved, we have also driven our P&E additions, measured as a percentage of revenue, lower by almost 300 basis points since 2017. Consequently, our OCF less P&E additions has improved by over 500 basis points to 21.2%. This increase is a great start for LLA, and we remain focused on delivering our medium-term objective on this metric to the mid-20s as a percent of revenue, as we target further cost efficiencies and reduced capital intensity.
Turning to Slide 15, our balance sheet remained strong, as our debt has an average maturity of 6.5 years as adjusted for the January refinancing and over 90% is due in 2024 or beyond. We also finished 2019 with $2.3 billion in liquidity, a roughly 35% increase year-over-year.
In the fall, we refinanced LCPR and raised incremental debt to finance the AT&T acquisition. And during 2019 and early 2020, we opportunistically refinanced C&W's capital structure, improving cost and tenure. Specifically, in January of this year, we refinanced C&W's $1.64 billion 2026 term loan with a $1.5 billion 2028 term loan and a $150 million of 2027 senior secured notes. Importantly, we achieved a borrowing cost reduction in the term loan of 100 basis points to LIBOR plus 225. The majority of our remaining maturities in 2024 or earlier are now concentrated within our VTR credit pool, which will be a near-term focus of ours.
Moving to our guidance, as Balan mentioned earlier, we achieved our 2019 public targets in OCF, P&E additions and adjusted free cash flow. On the far right of the slide, we have laid out our 2020 public guidance targets excluding the AT&T assets, and we'll revisit our targets as needed post close of that transaction. For 2020 OCF, we expect to deliver low-to-mid single-digit rebased OCF growth. As compared to 2019, our 2020 rebased growth is expected to be adversely impacted by non-functional currency exposure in several of our markets. For P&E, we expect a reduction in our P&E additions from 19% of revenue in 2019 to approximately 18% in 2020, continuing our trend of lower capital intensity.
For adjusted free cash flow, we are targeting approximately $150 million for 2020, despite the headwinds associated with the depreciating Chilean peso, the phasing of our collection activity as noted earlier, and cash outlays, especially in Q1, associated with our more intensive capital investment activity in Q4 2019. As it pertains to our quarterly phasing, we would expect our adjusted free cash flow to be significantly weighted toward the second half of the year.
To wrap it up, we are intently focused on driving value for our stakeholders, including our customers, our shareholders and our employees. We are focused on delivering our guidance targets, which we have done each year since our split-off. We will continue to innovate for our customers in terms of both products and service levels, which we are doing, as Balan highlighted earlier, and which we will set the foundation for continued top line growth.
We will continue to drive increased scale through our Panamanian operations center and optimization of our business processes. Early signs of success are evident in our OCF margin expansion. Once we close the transaction, we will begin integration of the AT&T assets, which we believe will significantly enhance our US dollar cash flows in the coming years. And finally, a core tenet of this management team is that as we continue to pursue the levered equity strategy, we will remain disciplined in how we allocate capital to enhance shareholder value.
With that operator, we are ready to take questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from Michael Rollins from Citi. Please go ahead.
Michael Rollins -- Citi -- Analyst
Hi, thanks for taking the question. When you look at the investment strategy for the Company, have you sensitized the potential to accelerate broadband upgrade and deployments beyond the current plan, accelerating capital and trying to look at what that might bring for the Company financially versus the current pace and decision around that?
Balan Nair -- President, Chief Executive Officer and Director
Hello, Michael, thank you. Yes, that's a question that we grapple with a lot. And we have looked at ways where we can actually expand beyond the 500,000 that we've talked about on new-builds. But it's a little bit more complicated than just capital allocation. It requires moving a lot of contractors, the processes to support it. I think we feel really good about the numbers that we have today, and we are always going to look for opportunities to do more because we think the payback is great, the IRRs are great, the story is great. And really, I think one of the secret sauce of our company is, we know how to build and we know how to sell. And so, we are always looking for opportunities there.
Michael Rollins -- Citi -- Analyst
Thanks very much.
Operator
Our next question comes from James Ratcliffe from Evercore. Please go ahead.
James Ratcliffe -- Evercore ISI -- Analyst
Great, thanks. Two if I could. First of all, just on the free cash flow weighting for 2020 for the back half of the year, is that just working capital? Or is there other things going on at the OCF or capex or P&E additions line? And secondly, an area doesn't get a lot of attention, but wireline voice adds were strong again in the quarter, and you guys have been adding customers there. Can you talk about the strategy there and what's driving the growth in the segment? And I think most people are looking at is a declining segment overall. Thanks.
Balan Nair -- President, Chief Executive Officer and Director
Sure, I'll take the second question first and I'll ask Chris to jump in on the first one. On the voice adds, if you recall, in 2018, toward the fourth quarter, we were seeing some declines in the voice adds. We specifically targeted that, and it's part of the bundle strategy. As a single stand-alone product, voice is not really a growing product. But as a bundle strategy, it starts to make sense. And so, we've been quite creative on it. And the area where we've really focused on was in Chile, where we are really the leading fixed voice provider. And Guillermo and his team has done a very nice job in both retention as well as, like I said, the bundling proposition.
Now, back to the first question, I'm going to ask Chris to jump in there.
Chris Noyes -- Senior Vice President, Chief Financial Officer
Yeah, James, the free cash flow phasing, certainly, is going to be much more weighted to the second half, in particular the Q4, similar to what you saw in 2019, with the exception that there will be working capital swing or unwind in the first quarter. So you would expect to see a negative working capital out of the gate. And also, recall that in terms of our phasing, we do have a significant amount of our interest expense in sort of the first and third quarters of the year. And I would expect that in 2020, relative to 2019, that our capex phasing in the year won't be as back end -- it certainly today won't be as back-end weighted as it was in 2019. So, the payment cycle will be a little bit different in terms of how it rolls through the free cash flow.
James Ratcliffe -- Evercore ISI -- Analyst
All right. Thank you.
Operator
Our next question comes from Soomit Datta from New Street Research. Please go ahead.
Soomit Datta -- New Street Research -- Analyst
Hi. A couple of questions on operations, please. One, just in Chile, could you give us an idea how things are on the street, so to speak, given we've been hearing about the social unrest and kind of movement down there? How is that, if it is, impacting your business and how has that trended into the first quarter? And either because of that or just generally in terms of competitive dynamics, do you think you can get the Chilean business back to the kind of growth rates it was showing not so long ago, so I kind of near sort of 4% or 5% perhaps?
And then the second question is just on Panama. There were some sort of good numbers. I think the managed services business was performing well. I think the commentary continues to be around still negative competitive dynamics, unfortunately. Are we any closer do you think to those competitive dynamics easing? Are we kind of any closer to having clarity on the consolidation process from a regulatory perspective? And do you know -- what do you think your role could be in that process, please? Thank you.
Balan Nair -- President, Chief Executive Officer and Director
Sure. I'll ask both Guillermo and Inge to be ready to jump in here as well. On the second question on the consolidation in Panama, we are actually quite excited about that. The mobile market, there are four players. It needs to go down. The government passed the law last year. It took a while for the regulator to come out with their specific rulings. They actually did one last year, and it's just been amended, as a matter of fact, this week. And we think it's very favorable to consolidation there. And I suspect something could happen in the next 12 to 24 months for sure.
Now back to Chile, I'll ask Guillermo to jump in here because he can give you really good insight from the ground. So, Guillermo?
Guillermo Ponce -- Chief Executive Officer-VTR
Yes. Thank you, Balan. On the situation in the ground, after a very difficult end of the year last year, mostly related to the disturbances to public order, we have seen a more quiet January and February. Well, some disturbances still occur in down towns of a few cities in the country. We see no relevant effect in our businesses. Our stores are functioning normally today. Our network is functioning normally. And we -- what we've learned from the end of last year is to be prepared to number one, keep our employees safe; number two, keep our service continuity for our customers. And we are sort of prepared to face a good Q1. We see good demand in the market. The services are showing resilience, especially the broadband side. And we are about to enter the back-to-school season in Chile. So, we are confident that we are in good shape to face it.
Balan Nair -- President, Chief Executive Officer and Director
Thank you, Guillermo. Inge, you want to make some comments on Panama?
Inge Smidts -- Chief Executive Officer, Cable & Wireless Communications
Yes. Hey, hello. Panama, I think, look, we've been operating it now really stringently. With B2B enterprise, we really have our hands on it and we're really moving forward very strongly. Also in the SMB segment, we made some very clear operating moves as we speak in the last months. B2C fixed, we've really, really have fantastic growth in the last year. And B2C mobile is a very challenging competitive environment, but I think we've come with very clear propositions, and those propositions now bring us in a very competitive market. But still, we're starting to see sustainable growth in the revenues now, and that's what we are there for. So, we are very confident that we are on a good track also in Panama.
Guillermo Ponce -- Chief Executive Officer-VTR
Thank you, Inge. Hopefully that covers it. Next question.
Operator
[Operator Instructions] Our next question comes from Kevin Roe from Roe Equity Research. Please go ahead.
Kevin M. Roe -- Roe Equity Research -- Analyst
Thank you. A couple. On Puerto Rico, at a high level, could you share your timing for integration of the AT&T Puerto Rico business? For instance, when we could start seeing a bundled product in the market between fixed broadband and mobile?
Balan Nair -- President, Chief Executive Officer and Director
Sure. Hey, Kevin. So, in Puerto Rico -- and I'll ask Naji to jump in here also and with John Winter, our General Counsel. And we think we can -- this deal will still close in the second quarter, as I've indicated earlier. And we are working closely with AT&T on how we can modify some of the products and really come up with a really nice bundled offering, and Naji is leading that on our behalf on the ground. So Naji, maybe you want to make a comment here?
Naji Khoury -- Chief Executive Officer, Liberty Cablevision of Puerto Rico
Yes, sure, Balan. As Balan said, we expect the transaction to close in the second quarter. And the way our plan laid out today is, we will likely start integrating our brands within six months, and within a period of 12 months, we have to have completed the rebranding. And as you know, we've said it as well publicly, part of our integration with AT&T and our carve-out includes a TSA, transitional service agreement, which will take approximately three years. As you go through three years, we will basically carve out the systems and the network from AT&T. So, we will likely start seeing synergies, as Balan mentioned at the begin of the call, sometime within a year after we close the transaction. As to your question when we could see a bundled product, I think it's just too early now to talk about that. But I would say, you can imagine that's going to be part of our strategy as we move forward.
Kevin M. Roe -- Roe Equity Research -- Analyst
Thank you, Naji. And one quick one for Chris. The consolidated OCF number you reported for Q4, if you could just walk us through and quantify any one-time benefits in the Q4?
Chris Noyes -- Senior Vice President, Chief Financial Officer
Yeah, sure. And I can direct you to the press release, and in particular, there is a couple of pieces. In the OCF for Cable & Wireless, we did have about $12 million of reduction in programming costs related to a settlement that we reached with -- new agreements with programmers that cleared up some outstanding liabilities. And we also had $10 million in withholding tax benefits that we have with third-parties as the passage of time allowed us to take off the liability. But those are the benefits.
On the opposite side, we had the impact of Hurricane Dorian in Q4 that impacted revenue and OCF. In OCF, it was a $4 million hit, and then bad debt in Cable & Wireless was up $6 million on a year-over-year basis as well. In addition, last year in the fourth quarter in Cable & Wireless, there was a $13 million benefit related to the insurance recovery. So, if you take those numbers together and offset it, they almost net out from a growth rate perspective in the fourth quarter.
In addition, if you look across the group, and I think I made it clear in my remarks, also Puerto Rico's growth rate was impacted by the $40 million -- $49 million benefit in Q4 of 2018 from the insurance recovery. And in addition in Chile, we did have some impact from the social unrest, where we had a $2 million credit in that business. So obviously, lots of different puts and takes. But in many cases, they kind of blend out when you look on a year-over-year basis.
Kevin M. Roe -- Roe Equity Research -- Analyst
Thank you, Chris.
Operator
Our next question comes from Mathieu Robilliard from Barclays. Please go ahead.
Mathieu Robilliard -- Barclays Capital -- Analyst
Yes, good morning. Thank you. I had a question about consolidation in the region. So obviously, one of your competitors in the region has announced that it is ready to sell, monetize partially entirely some of its assets. When you look at the portfolio, are there any geographies where you think it actually would make sense for you to look at? Or is this going to [Phonetic] be a bit early considering you are in the process of buying AT&T Puerto Rico and from a balance sheet and, I guess, operational bandwidth, maybe it's a bit early? So, general comments about that would be super helpful.
And then following up on Chile, so if I understand the answer you gave previously, the events had a little bit of an impact in Q4. But do I get to try that you expect therefore things to recover from your perspective in terms of top line dynamics for the rest of the year, assuming obviously the situation doesn't deteriorate again? Thank you.
Balan Nair -- President, Chief Executive Officer and Director
Sure. On the -- you're referring to the Telefonica announcement.
Mathieu Robilliard -- Barclays Capital -- Analyst
Correct.
Balan Nair -- President, Chief Executive Officer and Director
And we don't comment on M&A, but it would be silly for us to not always be hanging around the hoop for any potential opportunities inorganically in our region. And so, that's probably all I should say about it. But we are very knowledgeable about all those assets. And they're good assets in some areas. Some areas, there's currency issues, but we will be very smart about this. And I think Chris and I have both said before, we are very disciplined on M&A activities. And one of the primary things that we look at is levered free cash flow per share, and it's got to be accretive to us in any transaction. And I have also stated that our goal is really not to get bigger. Our goal is to create value. Just getting bigger is not that interesting to us. Creating value is what's really interesting to us.
Your second question on Chile, the Chile issue for us, mostly it's around currency. It's not operational. Guillermo indicated to you earlier our confidence in the business. Our operations are doing great. Our stores doing great. Our channels are fine. It's really a currency issue for us. So -- and we feel very confident in that economy and in that country and the prospects for it, both medium and long-term. And the currencies will settle again. The central bank in Chile has committed and they haven't completed yet spending money to actually stabilize the currencies. Right now, when you see the currency movements, it's a whole bunch of other things that's driving it. It's not the social unrest. Its price of oil. It's the copper prices. It's coronavirus in China. There's a whole bunch of things that's driving that. But the currencies will settle and I think will get better. But operationally, Chile -- our business in Chile is fine. Thank you.
Mathieu Robilliard -- Barclays Capital -- Analyst
Thank you.
Operator
Our next question comes from Matthew Harrigan from Benchmark. Please go ahead.
Matthew Harrigan -- Buckingham Research -- Analyst
Thank you. When you look at the FX-neutral ARPU per customer relationship in Puerto Rico, and more importantly, at Cable & Wireless, you're actually growing in the 5% vicinity. I know you're down twosies [Phonetic] at VTR. So it's considerably ahead of your US peers. And I know, to some extent, you've had a volume strategy in middle-income markets. But was there some sort of anomaly in Q4? Because on the surface, it seems like it's incredibly encouraging. And I know you're adding more RGUs than customer relationships. But when you look at the large installed base, it can't just be that. And then secondly, putting on your old CTO hat from SCTE days, can you talk about how the advantages of having a quad-play network capability with everything in-house are changing as mobile and fixed technology evolves? Thank you.
Balan Nair -- President, Chief Executive Officer and Director
Sure. On the ARPU side, in Puerto Rico for sure, we started to take price increases as it becomes available to us. And in Chile, a lot of the movements are really a function of bundling. That's really -- on a per customer basis, that's what you see. And -- but I'll tell you, and I've been also clear internally, our goal is -- in this Company is to maintain our ARPU, stabilize ARPU, but really grow this business on volume. This is how we want -- I want my managers to think about the problem. We want to grow this business based on volume. You've got to be very careful when you continue to take price increases because you just open an arbitrage opportunity for not only your traditional competitors, but future competitors as well. So we are trying to train our managers to be really focused on growing this business through the hard work of gaining volume, not the easy work of just taking price increases. So, I'll leave it at that.
Now, on the quad-play, we are seeing benefits of the quad-play, not as much as I'd like to in a lot of areas because primarily the mobile product is prepaid. I'll tell you, in Puerto Rico, where this future transaction, the AT&T business is more than 70% postpaid, and you are going to see us be very creative in how we tie that postpaid business to our triple-play. But in the rest of our business, Betzalel, who is my Chief Operating Officer, together with his team, is working really hard on trying to move that prepaid business into postpaid. We're making some progress and we are getting very creative on looking at ways to make the prepaid business look a little bit more like postpaid in a hybrid way, and then attaching it to our triple-play. And that's experimentation has started, and we are going to work on it even more so in 2020.
Matthew Harrigan -- Buckingham Research -- Analyst
Thanks Balan.
Operator
We have time for one final question. And our next question comes from Vitor Tomita from Goldman Sachs. Please go ahead.
Diego Aragao -- Goldman Sachs -- Analyst
Hi, good morning. This is actually Diego Aragao from Goldman. So, just a follow-up question on -- related to Chile. We have been seeing some companies deploying fiber and speeding up investments in that market to offer a naked broadband. So, I guess, my question is, how this could not only affect your broadband business in that market, but also drive some cord-cutting in there, given the growing number of OTT offers and the penetration of those servers [Phonetic]? Thank you.
Balan Nair -- President, Chief Executive Officer and Director
Okay. I'll answer this question, and I'll ask Guillermo to jump in a little bit as well. On the fiber-to-the-home build, you've seen most of that being built in the C and D areas, areas that previously we also have neglected. But I'll tell you, our strategy has changed, and we are now very aggressively building out into those areas. And the reason our strategy has changed is primarily driven by the fact that our engineering and operations team have come up with a way to build out at a cost point that is very attractive. And suddenly [Phonetic], all these markets that previously we've kind of avoided, we're not jumping into because we think the returns on it is going to be really positive. And we've proven that technology as well as those operation. And as a matter of fact, if you look back in the second and third quarter of last year, we made a press release that we are expanding our new-builds in Chile, primarily because we want to target those areas. So, yes, you're right, there's a bunch of smaller fiber-to-the-home guys coming up. We think those areas are great opportunities for us and will go head-to-head with them. And Guillermo and his team with the VTR brand -- I'll tell you, I personally went to some of those homes in some of those areas with Guillermo, and customers are saying, "Boy, with the VTR brand and you guys coming in here, you are it, we want you guys." And so, we think it's been really positive.
Now, Guillermo, maybe you want to say a couple of things as well?
Guillermo Ponce -- Chief Executive Officer-VTR
Yeah. Thank you. Just to add the fact that we've been competing with -- against fiber for a decade now, either the Telefonica fiber, the Entel fiber, the Claro fiber, now the newcomers' fibers. And yet, with all this competition in the market, our consumer value proposition, tied with our brand, is proving to be the winning factor. VTR continues to be not only the leader in market share, but also a leader in share additions year-over-year.
Balan Nair -- President, Chief Executive Officer and Director
And if your second -- thanks Guillermo. And your second question on code-cutting, code-cutting is happening everywhere in the world. But in our region specifically, it is not as -- it hasn't accelerated like it has elsewhere. The linear product and especially with our new launch of our new Hub TV, we think video is not a dying product. And while it's not a super growth product either like in the old days, it is not a dying product. And we are very competitive on the video front. And we are managing it and mostly through the proposition itself, the technology and the product offering, but more importantly, the COGS on this product. This is a big focus for my operating team, as well as Chris and our finance team as well.
Diego Aragao -- Goldman Sachs -- Analyst
Okay, perfect. This is very helpful. Thank you for that. And just like a second question, if I may, related to 4G in the overall Caribbean region, as you are getting close to cover, let's say, most of the parts in these regions, how is the real penetration of those services among your customers and how you think the business and the technology should trend in the next couple of years? Thank you.
Balan Nair -- President, Chief Executive Officer and Director
Sure. 4G remains under-penetrated in most of our places. Our best penetration in 4G, of course, is in Chile. I think Bahamas -- and certainly, Bahamas is pretty high. But the rest are still pretty low. In Jamaica, as an example, it's under 50% still. We see huge opportunity for two reasons. One, with LTE, people consume more data and they get more entrenched with the product itself. And secondly, with that more data consumption, we see an improved ARPU as well. And it certainly makes it more interesting for customers who want a postpaid product. People that consume lots of data would rather have a postpaid product than a prepaid product. And our teams are working really hard on figuring out the right proposition to have people transition once they are big consumers of data. And that's why we are really excited about LTE. My engineering team, Vivek and his folks have done a really good job in getting the coverage up. Now, our commercial teams are following on with that to see how fast we can transition customers to LTE.
Diego Aragao -- Goldman Sachs -- Analyst
That's very helpful. Thank you.
Operator
That will conclude today's question-and-answer session. I'd like to hand back to Balan Nair for any additional or closing remarks.
Balan Nair -- President, Chief Executive Officer and Director
Sure. Thank you, operator, and thank you everybody for joining this call. We are really excited about how we performed in 2019. We look forward to a good year in 2020. Chris' guidance on 2020 is spot on. We think we can achieve that. We're also really excited about the AT&T transaction. We will close that by middle of this year. And I think -- like I said last year as well, I think we're off to the races. So, thanks everybody, and we'll talk to you again in 90 days.
Operator
Ladies and gentlemen, this concludes Liberty Latin America's full year 2019 investor call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Latin America's website at www.lla.com. There, you can also find a copy of today's presentation materials.
Duration: 69 minutes
Call participants:
Guillermo Ponce -- Chief Executive Officer-VTR
Balan Nair -- President, Chief Executive Officer and Director
Chris Noyes -- Senior Vice President, Chief Financial Officer
Michael Rollins -- Citi -- Analyst
James Ratcliffe -- Evercore ISI -- Analyst
Soomit Datta -- New Street Research -- Analyst
Inge Smidts -- Chief Executive Officer, Cable & Wireless Communications
Kevin M. Roe -- Roe Equity Research -- Analyst
Naji Khoury -- Chief Executive Officer, Liberty Cablevision of Puerto Rico
Mathieu Robilliard -- Barclays Capital -- Analyst
Matthew Harrigan -- Buckingham Research -- Analyst
Diego Aragao -- Goldman Sachs -- Analyst
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