Good morning, and welcome to Liberty Latin America's Second Quarter 2020 Investors Call. At this time, all participants are in a listen-only mode. Today's formal presentation materials can be found under the Investor Relations section of Liberty Latin America's website. Following today's formal presentation, instruction will be given for the 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 facts. 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 and Form 10-Q. Liberty Latin America disclaims any obligation to update any of these forward-looking statements to reflect any changes in its expectations or in the conditions on which any 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 our Investor Relations website. I would now like to turn this call over to our CEO, Mr. Balan Nair.

Thank you, Naji, and welcome, everybody, to our second quarter results presentation. Firstly, I hope you and your families are safe and in good health. Well, for today, our running order is I'll begin by providing an update on the impact of COVID-19 across our markets and how we have been managing through it during this period using the framework I laid out in the last earnings call. Chris Noyes, our CFO, will then follow up with a review of our financial performance and provide an overview of our capital structure, including the rights offering we announced yesterday. After that, we'll get straight to your questions. As always, I'm joined by my executive team from across the region, and I'll get them involved as needed during the Q&A following our prepared remarks. As a point of housekeeping, we will both be working from slides, which you can find on our website. I'll start on Slide 4 with our key highlights. Following a strong first quarter, as anticipated, our performance in Q2 was negatively impacted by the pandemic. April was a low month. On a positive note, we started seeing improvements in May. And then in June, we had a clear plan on how to react to the challenges and how to be proactive as well in many areas. That is why even as the situation remains challenging in most markets, we have seen our business improve month-over-month. As a matter of fact, July is also better than June. Despite this difficult backdrop, we added 47,000 broadband subscribers and recorded net RGU growth adds in Q2. Across our markets, Puerto Rico performed particularly well, recording the best-ever quarter for RGU additions. To put this into context, normalizing for Puerto Rico size, this would have put us ahead of all U.S. peers in terms of adds. Financially, our focus has been on cash generation, and we reported adjusted free cash flow of $130 million in the quarter. This is based on seasonality through the year, as Chris will talk to, but this is undoubtedly a positive result. I want to also note that this includes continued investment to expand and upgrade our networks. We are leaning into our pieces. And finally, last week, we were excited to announce the acquisition of Telefónica's fast-growing Costa Rica mobile business. Together with Cabletica, which itself has been a great growth business for us, this combination will create a fantastic opportunity to deliver a leading converged offering in one of the region's best markets. Moving to Slide 5, in an update regarding the eight focus areas I outlined last quarter. Overall, I'm very proud of what our team has achieved in a relatively short amount of time. Our primary focus throughout has been on the safety and well-being of our employees. We've been agile as an organization and adopted our work practices to enable working from home where possible while also doing as much as we can to protect our colleagues who need to be in the field as they help to deliver the connectivity services, which are vital to the communities we serve. We have lost one employee due to COVID, and the whole company mourns for that. It is not lost upon us the gravity of what we are facing. In the next two areas, our network and commercial activities are key drivers for our future success. And I'll take you through some of our initiatives in the coming slides. Moving on to government affairs, we continue to work as partners with governments, stakeholders at all levels, making sure that they know we are here to provide critical services to their countries. This includes investments we continue to make in our networks, people, and communities. I'll cover factors such as moratorium laws, where applicable, in our key markets on the next slide. We are also seeking regulatory approval as we work towards closing the agreed AT&T and Telefónica Costa Rica acquisitions. We expect the AT&T deal to close in Q4 of this year. Turning to our COVID-19 planning activities, early in the onset of the pandemic, we established a task force that carried out extensive scenario planning. I'm pleased to tell you that we are outperforming most of the scenarios the team had anticipated. This team also worked on some exciting initiatives that will drive efficiencies and improve the customer experience in the future, such as zero-touch and digital interactions. I'll talk to these in more detail later in my presentation. Next, to finance and treasury. We continue to be active and have successfully refinanced our BTR notes, taking our average maturity to approximately seven years. We are committed to maintaining the right balance in our capital structure. As we look to the Telefónica Costa Rica acquisition, we took the decision to launch a $350 million rights offering yesterday. Chris will cover the rationale in more detail, but it is important to note that our Board and leadership team have confirmed their intention to subscribe to the offer. We are on track with a $150 million fixed cost reduction plan across operating costs and CapEx. As we said previously, in most cases, this accelerates plans we already have and should stand us in good stead as we emerge from the current crisis. Lastly, we focus on free cash flow generation, and Q2 showed that we can achieve it in a challenging environment. In terms of M&A, we are focused on closing our agreed acquisitions. We remain agile and see an attractive pipeline of opportunities in the region. We continue to look for accretive levered free cash flow per share opportunities. Finally, our Board continues to be engaged to provide valuable advice and support to me and my team and, as mentioned, are fully supportive of the rights offer. On Slide 6, I wanted to provide more color on some of the challenges of COVID-19 in our key markets. We operate across a range of geographies with varying impacts experiencing each. Overall, we are seeing markets ease restrictions. However, this virus is unpredictable. We've positioned on this slide that markets are moving from where we have seen the most stringent restrictions on the left to those less impacted by lockdowns on the right side of the slide. As more markets move to the right of this slide, this should provide a tailwind for the remainder of the year. Starting on the left with Panama, which has been the strictest lockdown measures across all of our markets. Since late March, movement outside the home has been severely restricted, and this has impacted all of our business lines. In addition, there is a moratorium law on bill collection. Both are easing up. We should see this fall to be better than this summer. Moving to Chile, where, again, quarantine measures continue. Here, things are not getting that much better. Chile is in the winter season. Now sales have been impacted by the shutdown. We still have positive net adds, but this is one we are watching closely. In the C&W Islands Group, economies are typically tourism dependent. Although it varies, the impact of the pandemic has tended to be significant. As a market for recovery, we are seeing stores now largely reopened, and there haven't been moratorium laws such as in Panama. But in the Bahamas, they went into a lockdown again this week. Like I said, this virus is unpredictable. In Puerto Rico, restrictions were relaxed, but that was reversed, and a curfew is in place until mid-August. Operationally, all of our stores have been back to regular hours. We opted into the SEC pledge to keep America connected. However, at the end of June, less than 5,000 subscribers were on our essential services plan, and we did not count them as RGUs. Lastly, to the right of the slide, in the markets where lockdown measures have been less stringent. In Jamaica, the tourism industry is slowly getting back up and running. We forced our sales teams during the first couple of months, but we are now back on the street. We have also continued investing in network expansion. Costa Rica is the final market I wanted to cover. This has been a good market for us, and there has been limited impact from the pandemic thus far. The government has done a great job with launched stimulus measures and has been proactive in dealing with the virus. Turning to Slide 7, where we've highlighted some of the network investments, innovative products, and operational initiatives we are delivering for our customers. Starting with our network investments on the left-hand side, our industry has seen significant increases in bandwidth demand following the onset of the COVID-19 pandemic, particularly where lockdown measures have been enforced. As a result, we have responded to ensure our customers continue to receive high speeds and good levels of service. Across our different products, we added 400 gigabits on our subsea networks. In Chile, we increased fixed network capacity by 30%. As shown in the lower chart, Chile saw a more significant spike in bandwidth consumption across our markets, partly related to the high speeds our customers enjoy. The average speed in Chile was approximately 219 megabits per second in Q2, which was a 36% increase over the prior year. In total, we added 1.8 terabits per second capacity to our network. This is about a 26% increase in our total capacity, and we did it in a four-week period. Lastly, we continue to invest in our mobile networks by increasing core capacity in Jamaica and Panama by 40% to 50%. We also worked with government partners to add spectrum to temporarily cover spikes in usage, for example, in Panama. Moving to the center of the slide. We have continued to innovate throughout this period, in some cases, even more so given the evolving market conditions. Examples I would highlight here are assisted self-installs, providing a platform to enable customers in the Caribbean to continue their education with FLOW study, WiFi optimization products, and our Google Android platform, Hub TV, which we've launched in Puerto Rico and being rolled out in other markets. Finally, on the right side of the slide, the operational improvements we should support our business both in the near-term and as we look to the future. Examples here include adapting to the lockdowns in our Caribbean markets with mobile and virtual stores, promoting digital payments in our markets such as in VTR and Liberty Puerto Rico, where digital payment collections increased by approximately 75% and 85%, respectively, in June. And for the longer term, we are working hard to make zero-touch installs work across our markets. This would be a game-changer. Turning to Slide 8. Consumers continue to demand high-speed connectivity, and our fixed-line services, which represent just over 30% of total revenue, have been particularly resilient. Starting with our RGU additions by segment on the left of the slide, Cable & Wireless had a strong start to the year, with record Q1 additions, but then saw weaker performance in Q2 as the lockdowns I mentioned impacted our markets to varying degrees. In Panama, we reported 45,000 RGU losses during Q2. However, this included the removal of 76,000 RGUs who we continue to provide a service to, but that have not paid us in accordance with our recognition policy. These customers still have our equipment in their homes and use of our service. We believe a number of them will come back into our base as conditions improve. Jamaica is worth highlighting as the market that continues to perform well, with 26,000 RGU adds in Q2. Like Puerto Rico, this number is remarkable if you normalize the base. Turning to VTR and Cabletica. We saw a solid performance in Chile overall. However, video subscribers declined in Q2, driven by the suspension of the Chilean soccer league, which we carry on a premium channel. Cabletica had another strong quarter and continues to grow as it challenges the incumbent in the Costa Rica market. Finally, to Puerto Rico, where Q2 was our business best-ever quarter, adding 34,000 subscribers as consumers saw the value of our high-speed proposition during times of restricted mobility. At a group level, this aggregated to 19,000 net adds in Q2 and 79,000 in the first half. As you can see in the chart, the numbers were significantly impacted by the removal of 76,000 RGUs in Panama, as we discussed. On the right of the slide, I wanted to call out two important drivers for our fixed business. Firstly, broadband is a driver of growth across our group and leads our proposition. The C&W figure here would have been 28,000 higher had we included the Panama RGUs that were excluded from our subscriber comp. Secondly, we are continuing to expand our footprint with over 150,000 homes passed or upgraded in the first half of the year and over 70,000 of that number coming in Q2 during periods of restricted mobility. This is quite impressive. We are continuing to invest in a thoughtful and targeted manner. And like I said, we are leaning into our thesis. Turning to Slide 9, in our services most impacted by COVID-19: mobile and B2B. Looking first at our mobile performance on the left of the slide. At C&W, we began to see impacts from COVID in the second half of March, and this carried into April and May, where we saw the worst of our subscriber losses. These losses were primarily due to mobility restrictions, limiting the ability of customers to access services and reduce demand for top-ups generally given the time customers spend in their homes. As you can see in the colored chart, we saw an improvement in June as lockdown restrictions eased. This included net adds in Panama. Our momentum has continued following the quarter-end. In Chile, we saw a small impact from additions in Q2, driven by store closures related to lockdowns as well. Moving to B2B on the right, our B2B business reported a rebased revenue decline of 3% in the first half. Across our markets, this was driven by cable and wireless, where over 90% of our B2B revenue is generated. In BTR, Cabletica, we continue to build on our small market share and reported double-digit B2B rebased revenue growth. On the far right of the slide, I wanted to break out the B2B business and provide some color on the opportunities and challenges we've experienced during the pandemic. Starting with our enterprise segment, which represents approximately 50% of our revenue base. Here, we've seen opportunities to enable our clients' employees to securely work from home as well as delivering increased bandwidth and applications. We've also been quick to support governments around their digital initiatives. Moving to SMB, which is about 25% of our revenue. We aim to be partners with our customers, helping them continue to operate through this difficult time and building on or reinforcing strong relationships for the future. Finally, we have wholesale, including our subsea business, which represents about a quarter of our B2B revenue and has been the most resilient through the first half as we've responded to increased bandwidth demands from our customers. Finally, for my section, to Slide 10, in our inorganic strategy. Last week, we announced the acquisition of Telefónica Costa Rica Mobile operations for an enterprise value of $500 million or 6x 2019 adjusted OIBDA, including run-rate synergies. Telefónica's Costa Rica business provides a great opportunity for us in a good market, where our Cabletica fixed-line cable business has grown revenue and adjusted OIBDA by 12% and 20%, respectively, on a CAGR basis from 2017 through 2019. Through this acquisition, we will create a leading integrated player with capabilities across both fixed and mobile products and combined revenue of approximately $400 million. Being able to deliver a full suite of products is something that we value strategically. Following this and the AT&T acquisition, all but one of our markets will have fixed and mobile capabilities. Telefónica Costa Rica is the number two mobile player in a three-player market. And like Cabletica, it is a challenge. From 2017 to 2019, the business delivered high single-digit top-line and strong double-digit OIBDA growth. Importantly, 60% of revenues are postpaid revenues, and this business has had a successful strategy of migrating prepaid to postpaid. The business comes with a good mobile network and 90% LTE coverage by population, with three-quarters of towers carrying LTE. Finally, as with more consolidation opportunities, we anticipate generating synergies from the transaction, which, together with the growth in the business, make the acquisition highly cash-generative and accretive to us. Touching on AT&T briefly, we remain very confident of completing the transaction and now expect this to take place in Q4. Through both AT&T and Telefónica Costa Rica, we are consolidating markets and generating synergies. Both also have a majority of postpaid revenues. That is why IRRs and future cash flows are good. With that, I'll now pass you over to Chris Noyes, our Chief Financial Officer, who will take you through our financial performance.

Thank you, Balan. I will begin on Slide 12, and we'll touch upon both our Q2 and half year results. For the quarter, we delivered $849 million in revenue, reflecting a $134 million decline from Q2 2019. Roughly $60 million of the reported decrease in revenue is due to foreign currency translation, primarily the 20% average appreciation of the U.S. dollar against the Chilean peso and the impact from the 2019 disposal of our Seychelles asset. The rebased decline of 8% principally relates to B2B and mobile. Year-to-date, our $1.8 billion in revenue reflects a rebased decline of 3%, given we did not experience the full impact from COVID until the start of Q2. Moving to the top right, we have renamed OCF to adjusted OIBDA, albeit with no change in their definition. For Q2, adjusted OIBDA was lower as a result of an organic decrease and about a $23 million decline from a combination of foreign currency translation and the Seychelles disposal. Our $333 million in Q2 adjusted OIBDA reflects an 8% or $30 million rebased decline year-over-year. For the full six months, our year-over-year rebased decline was only 2%. On P&E additions, highlighted in the bottom left, we reported $153 million or 18% of revenue in Q2 and $286 million or 16% of revenue year-to-date. In dollar terms, each period is lower year-over-year. But notably, we continue to invest in our footprint in both new builds and network capacity. Finally, turning to the bottom right, we produced our best quarter ever in adjusted free cash flow with $130 million in Q2, benefiting in part from positive trade working capital and reduced cash taxes. Q2's result brings our half-year total to $81 million, which is ahead of last year's first half results after adjusting for $67 million in insurance proceeds that we received in Q1 2019. From a phasing perspective, we would expect to generate negative free cash flow in Q3, like we did in Q1 due to the concentration of our semiannual interest payments, while Q4 tends to be seasonally strong for us with respect to cash flow. Importantly, we are well on track to deliver positive free cash flow in 2020, which we had flagged on our Q1 call as a key target for the LLA management team. On Slide 13, we present our segment results. I will focus just on Q2, which is the upper half of the slide. Starting with C&W. We generated $515 million of revenue, reflecting a 12% rebased decline. This decline was driven by a 22% rebased reduction in mobile revenue, reflecting reduced recharge activity, fewer subscribers during the lockdown period, and less roaming. Similarly, the lockdowns across our markets have impacted B2B, which had a rebased decline of 12%, although our subsea business was able to modestly grow year-over-year. Fixed residential was largely resilient in Q2, as it was relatively flat in terms of rebased growth year-over-year, with broadband being the star performer. Q2 adjusted OIBDA fell by 10% in rebased terms as we generated $204 million. Compensating for the revenue decline, C&W significantly reduced both direct and operating costs on a year-over-year basis. C&W's P&E additions were $82 million or 16% of revenue and included over 50,000 new or upgraded homes during the quarter. Moving to VTR in Chile and Cabletica in Costa Rica, we posted revenue of $228 million in Q2, a 3% rebased decline. A key driver of this year-over-year decline relates to the suspension of the Chilean soccer league due to COVID, which led to discounts for our premium video customers. We experienced a 10% rebased decrease in adjusted OIBDA due primarily to two cost drivers. First, we have certain costs at VTR, including about 50% of our programming costs, which are denominated in U.S. dollars. We hedge a large portion of these costs on a near-term forward basis. The impact of the strong U.S. dollar, combined with the FX rates at which we are hedged resulted in about an $8 million adverse impact to VTR's adjusted OIBDA on a year-over-year basis. Second, significant bandwidth demand related to COVID resulted in much higher network and call center costs to handle the unprecedented spike in Chile. Our costs in these two areas were roughly $5 million higher over Q2 2019 levels, and we expect them to improve in coming quarters. Our P&E additions were $50 million or 22% of revenue, which was slightly lower when compared to 23% of revenue in Q2 2019. Ending on the right-hand side, Liberty Puerto Rico delivered $109 million of revenue in Q2 or 5% rebased growth. This result was a modest improvement over Q1's growth levels. We realized adjusted OIBDA of $52 million reflecting growth of 2% over Q2 2019. Our growth was modestly hampered by acquisition integration costs. Finally, we reported $20 million of P&E additions or 18% of revenue as we added over 5,000 new homes to our footprint and invested in both CPE and capacity to address consumer demand and usage of our network.

Turning to Slide 14. I thought it was helpful to look at how our OIBDA margins have changed since Q1. We have mitigated the impact of our sequential revenue decline by reducing costs. Both C&W and Liberty Puerto Rico maintained their margins while the decline in the VTR Cabletica margin was directly attributable to higher network and call center operating costs, together with an incremental $3 million sequential impact related to contracts denominated in non-functional currency. Overall, LLA's OIBDA margin held steady at 39% in the quarter as our direct and operating costs sequentially declined by over $50 million helping to mitigate our revenue drop. On Slide 15, I wanted to cover our balance sheet and liquidity situation in some detail, and we'll refer to the six sections on the slide. In section one, we have been very active on the financing front. Firstly, we completed an additional $90 million cap of our Puerto Rico bonds at 102.5 of par, with proceeds earmarked for the AT&T acquisition, further reducing our LLA equity investment. Secondly, we monetized VTR's in-the-money debt derivative at the end of Q2, and we helped lead the way in opening the Lat-Am high-yield market during COVID by refinancing VTR's $1.26 billion of high-yield debt in July at very attractive levels. This transaction improved our tenor, lowered our cost of capital, and added efficiency and flexibility to our structure. Thirdly, we extended near-term debt at Panama to 2025. In section two, our maturity schedule showcases the impact of our completed financing work as now 85% of our total debt is due in 2026 or later, providing stable financial footing for the long term. In section three, I thought it was important to walk through our cash position, excluding the $1.35 billion in restricted cash that will be used to help fund the AT&T acquisition. We finished Q2 with $1.75 billion in consolidated cash. Post-Q2, we used $187 million of cash from the debt derivative as part of our uses in the July VTR refinancing, and we repaid $275 million borrowed under our RCS at C&W and Liberty Puerto Rico. The final column of the walk shows the $660 million of our cash that is allocated for the AT&T acquisition. After considering these items, that leaves us with $630 million of consolidated cash, which is a level that provides us with a prudent buffer given COVID uncertainty and a number of geographies in which we operate. Our RCF availability is to the right of the cash chart. We finished Q2 with $765 million available. After the RCF paydown, it moves to over $1 billion available. In section four, as the chart depicts, we have ample cushion under our maintenance covenants in each of our three primary credit balances. Additionally, on an aggregate basis at LLA, we finished Q2 with net consolidated leverage of 4.2x and net proportionate leverage of 4.5x. Our longer-term target is to drive our leverage towards 4x. In section five and six, we highlight several financings that we expect to complete in the near term. We intend to finance the acquisition of Telefónica's Costa Rica business with 4x leverage, which equates to roughly $300 million of debt to be borrowed either locally in Costa Rica or at VTR Finance Holdco. With respect to the rights offering just announced, we intend to utilize this capital for acquisitions, including the equity portion of the Telefónica transaction and for general corporate purposes. As I outlined earlier, we are comfortable with our existing leverage levels and would like to bring them down modestly over time, and the rights offering provides us an additional opportunity to raise capital while not increasing our overall LLA leverage. The key terms of the rights offering include the following. The size is targeted for $350 million. The offering will commence in September. Rights will be distributed to all shareholders as of the record date. Each right will provide the opportunity to purchase a Class B share at a 25% discount to VWAP, which will be set at a later date. Rights will be transferable and publicly listed, and, most importantly, we have full support from LLA's executive team and board, including John Malone and Searchlight Capital, and the collective group intends to subscribe to their right. This support equates to approximately $50 million of the $350 million that we are looking to raise from shareholders. Turning to Slide 16. I will close our prepared remarks. We know across our markets, it will take time before consumers and businesses get back to full throttle. However, our operations have stood up well so far in the face of COVID. Connectivity and entertainment through our fixed residential services and backhaul through our subsea business provide us with a degree of consistency and resiliency in our results. I think we can all attest to our own experiences during this crisis. It is essential to have a high-speed, robust internet connection. Controlling our costs and CapEx is critical. We are sticking to our plan from a quarter ago and are on track to achieve our cost and CapEx reduction targets while still investing in future growth through new build and operational transformation touched upon by balance. We have more levers in our back pocket to reduce spending if needed. However, as you can see today, we remain focused on investing in our business. These efforts support our company-wide focus on free cash flow generation, and our Q2 result was a quarterly record for us in this metric, a good accomplishment given the top-line challenges presented by COVID. Besides investing internally, in Q4, we expect to close the AT&T acquisition and will be working on closing the just-announced purchase of Telefónica's Costa Rica business in H1 2021. We expect the two acquisitions will add over $1 billion of annual revenue to LLA, further increasing our scale and underpinning future growth and free cash flow generation. As we look to the rest of the year and more importantly to 2021, we are taking steps within our business that we believe will enable us to accelerate out of the recovery. The just announced rights offering will provide us with incremental flexibility and agility should additional opportunistic situations arise. With that, operator, we are ready to take questions.

Thank you. We'll take our first question from James Ratcliffe with Evercore ISI.

Good morning. Thanks for taking the question. Two, if I could. First of all, regarding the rights offering, why raise equity, particularly now given we're still in the period of COVID and just seeing the impact from that, and I think your stock price reflected that, and it doesn't sound like you will need cash for the Costa Rican transaction until next year. So I'm thinking about a question on the timing of that. And secondly, a lot of cost reduction year-on-year in the quarter. Can you talk about how much of that was just lower activity and sort of an offset to the lower revenue numbers? And how much of that was more structural? Thanks.

Sure. Hi, James. Let me address the cost reduction part first, and then we'll get to the rights offering, and I'll ask Chris to also jump in here on that. On the cost reduction part, of course, we have a bunch of direct costs that go down proportionally to the revenue. In the number we quoted, the $150 million, we did not include that direct cost. These are mostly indirect costs, and you can imagine that just a part of that, that's activity related, of course. But for the most part, they are costs that we plan on taking out that we have taken out, and we intend on keeping them out permanently. That's part of what we've been working on over the last couple of years as we improve our margins as well. On the rights offering, I'll make a couple of comments, and then I'll pass it on to Chris. We think it's a prudent capital structure that we want to get to where it's more equity raised for some of the things that we've been looking at in our pipeline as well as the Telefónica transaction. And with the Telefónica Costa Rica transaction, we thought this was a really good transaction and that all of our shareholders ought to be able to participate in it. The rights offering is a great way for everybody to participate in what we think is a highly accretive transaction for the company. I'll pass it on to Chris for comments around the timing of it.

Yes. I mean, obviously, a rights offering is an efficient mechanism in which to raise capital. In terms of timing, if you look back at all of our transactions, we do like to derisk the purchase price and speak for the capital on the earlier side instead of waiting until close to closing. That's – and it's also additionally – it's a good window for us in terms of raising a securities offering over the next, call it, 60 days.

Thanks, Chris.

We'll take our next question from Soomit Datta with New Street Research.

Hi, there, guys. A couple of questions, please. Just one on Puerto Rico. I wondered whether at all you could give a sense as to how the AT&T wireless business has traded over the first half of the year. I mean, probably difficult to be specific, but I just wondered, is that a market where, as we've seen around the world, there's been a very severe impact on mobile? Or is it one which has held its ground quite well? And then just also on Puerto Rico, the subscriber numbers look great. I think I'm right in saying you're back up to levels ahead of where you were pre-hurricane. I just wondered where can this business go in terms of penetration of homes passed, obviously, seems to be performing well. And then if I could just jump in with a second question on Chile, please. I think the numbers, both the revenue and the OIBDA are a bit spotty from the one-off bits and pieces, which you've highlighted. But I think just to sort of focus on the cost side of things, you did call out some network and call center issues, and the business has been impacted to some degree by volumes coming from COVID. I noticed at the same time the customer consumer protection agency's tarmac is bringing a class action suit against you for quality of service issues. So is that all sounding a bit worse than it is? If you could give a bit of clarity on what's happening there would be great. Thank you.

All right. I'll answer both your questions, and I'll ask both Guillermo and Naji to be on standby as well as I will call on you. Let me start with the Chile side. Our costs did go up slightly, mostly because call volumes were really high as well as we accelerated a lot of our network upgrade. Now our network upgrades in Chile, as I indicated earlier, were pretty significant, and we did them over a one-month period. But during that one-month period, we already had one of the highest broadband speeds, all of our properties in Chile. It really accelerated that. During that one-month period, during our upgrades, we did run into some network issues, and we've been very transparent about that. We are working with the government and the regulator right now to help them understand as well that this one-time event, this COVID period, is really a force majeure. It's not something that's just natural. But as we look at Chile going forward, Chile is coming into the winter period. It is in the winter period right now. The COVID condition is not improving, and it's under strict lockdown. We are powering through it, but we also realize that this is one that we are going to watch very closely over the next months or so. On Puerto Rico, you hit it right on. I mean, we're not only where we were at pre-hurricane, we are way beyond that already. We think the opportunities and the runway in Puerto Rico are pretty good. That's why we're investing in new builds there. Reinvesting in upgrades, and as we've indicated before, we're also participating in the CBRS auction in Puerto Rico. So we are in Puerto Rico, and we are very bullish on it. That's why we did the AT&T transaction, which, by the way, is mostly postpaid. That's why we feel confident about that business as we get into it. Now having said all that, I'm going to ask Guillermo to give maybe a little bit of color on valuable insight into the network situation in Chile. And then Naji, if you can give a little bit more color on the situation on the ground in Puerto Rico as well. So Guillermo?

Yes. Thank you, Balan. I believe you said it well on the network side. Of course, we were under a challenging situation, particularly in the month of May, as people entered into lockdowns and traffic peaked at some 40%, and we were diligently adding more capacity to the network at that time. Simultaneously, we also had challenges in servicing costs at our call center sites. We needed to move the team into a work-from-home mode. That was also a challenge in the sense that our ability to answer the increased volume of calls was challenged during that period. That created a lot of noise in the market, of course. We are the number one product provider in the country and also the one that serves people that are more noticeable and influential in the country. That, together with the number of complaints that the National Protection Agency received during that period created this loss situation, which, of course, we regret. But as Balan said, we are very sure that it's a force majeure situation, and we will present our discharges when we have the chance to see the details for the loss that we have not seen yet.

Thanks, Guillermo. Naji?

Yes, Balan. Good morning, everyone. Yes. The situation on the ground in Puerto Rico, I think the island has been doing actually very well. Despite some lockdown, you can see still activity. You had asked about the AT&T situation. I cannot provide specific details, but I can tell you that the consumer drive by, all the shops are open. The network has been able to take on a lot more traffic. So you see a lot of activity, so we assume that they're doing fairly well. And as Balan has mentioned, it is a postpaid environment. On the fixed side, yes, you asked a question regarding whether there is more runway ahead of us. I think there is, and I think its two elements that we can look at that will definitely work in our favor. One is the broadband penetration. The island's broadband penetration is likely approaching somewhere between 60% and 70%, so there's room to grow alongside the new build program, which is in full swing and has not stopped. Those two will contribute to adding broadband. Sometimes we don't talk about video, but video as well is growing for us. And if you look at our strategy and the correct pricing, the correct cost structure, we saw what happened, for example, with Charter, we're adding video subscribers while others are losing some. We feel that we have the right formula. We have the right ingredients and the right cost structure to be able to continue growing the RGU base in Puerto Rico, so we're fairly optimistic about the future.

Thanks, Naji.

Our next question comes from Mathieu Robilliard with Barclays.

Hi. Good morning. Can you hear me well?

Very well.

The first question I had was actually on the synergies that you mentioned regarding the building in Costa Rica. I don't know if my math is right, but it seems to me that you probably aim for a cut in the CapEx and OpEx at the target that represents maybe 20% of the current base. Something like that. I wanted to have a little bit of color on exactly where you see the synergies: is it content cost? Is it back on costs with the network integration, etc., and if I may sneak another one just in terms of the capital increase. So you mentioned in the press release that it's expected to use balance acquisitions, including the Costa Rica one, and I was just wondering if that's just a statement that leaves the door open without, at the moment, any precise ideas of what acquisitions in addition to Costa Rica you could be doing, or are you guys looking at different things and some of them could be interesting, and, therefore, you have flexibility to act if you want to materialize other transactions?

Well, thanks, Mathieu. Firstly, on the synergies, we kind of indicated it's about one-tenth of synergies in that transaction. That's on our math. You hit it pretty much close to where we would look at, and it's quite traditional. But in the case of Costa Rica, we are in-country synergies between the cable company and the mobile company. You can imagine you don't need two marketing groups. You don't need a lot of things that are duplicated between the two organizations. In addition to that, we also have our submarine cable coming into Costa Rica, which you can imagine we'll be moving a lot of traffic back into our network. There are a number of things that – we always get excited about synergies, in-country synergies, because those you can really nail. Now you had a second question around the rights offering and the funds we are raising for future M&A. Let's just say that there's a lot of opportunities out there, and our pipeline is quite active, but we are going to be very disciplined. It’s like the Costa Rica deal as well, where we look at very specific metrics and where we're really confident about the business that we're acquiring, as well as the synergy numbers and the opportunity for us. That's when we really strike. As we look at the rest of the region, there are a few of that, but like I've said many times before, our goal is to not get bigger. Our goal is to create value. If we wanted to get bigger, we would have announced some deals in the first quarter and second quarter of this year. But that's not our plan. Our plan is to create value here, and if we see valuable transactions, we see things that work for us and as well works for the seller, it's got to work for both of us, then you'll see us doing some announcements. The Telefónica one is a good example of something that works well for us and I think worked really well for Telefónica. So that’s how we think about our pipeline.

Thank you.

Our next question comes from Kevin Roe with Roe Equity Research.

Balan, if we could turn to the Jamaican – to the Caribbean and broadband RGU trends. I know different markets are moving in different directions, and net-net this quarter for Q2, it was negative. What's your outlook for the third quarter for the Caribbean as a whole for broadband net adds? Will we turn positive? If we drill down into specific markets, you highlighted Jamaica as a standout, and that positive trend continues. What's the profile of those adds in their ARPU? Are these remote workers primarily, remote learning? If you could give us an update on the Caribbean in general, the health of the SMB segment in terms of non-pay and potential bad debt trends changing. Thanks.

Sure. I'll ask Inge to also jump in here in a bit and put some of his thoughts. I feel really good about the broadband business in the Caribbean. You saw our numbers in Jamaica, which was – I'll tell you, if you normalize for it. We've essentially grown close to about 10% of our base on broadband, and that is pretty significant. I mean, there aren't too many cable companies, telephone companies, or anyone that goes 10% of their base. You follow Charter, Kevin, and so you know that I'm quite involved there. These numbers are very comparable, if not better, right, if you normalize them. The reason I feel bullish about it is that in the second quarter, we took a lot of broadband customers receiving services from us off of our RGU count. There were peers disconnects, but they were not really disconnects and you will see them naturally come back. They still have our modems in their homes, they're getting service from us, and I think the team – we, collectively, as a company have built a lot of goodwill with a lot of customers, where we've shown that we want to do the right thing. Our first instinct was not to look at customers and say, how can we disconnect them. We looked for ways to ensure they still have service even though they can't afford to pay at this point. I feel that will pay back in many ways. If I look at the third quarter, I actually feel bullish about our broadband numbers. I'm not going to give you a preview but July was looking a lot better than June. In general, in the Caribbean, it really goes with the tourism industry. Eventually, it will come back. I really don't have a crystal ball on that, but we're seeing some hotels reopen. We've also seen hotels open and then close down. This will take many months. When the tourism industry comes back, I think all will be good because we have a great product there. I think we've built a lot of goodwill during this COVID period. Inge, do you want to add some more color to my comments?

Thank you, Balan. Well, in terms of the Caribbean today on fixed, it's a clear focus area. As Balan said, we are focused on the penetration ahead. Like in Puerto Rico, we can still penetrate much deeper. We have our new build that is working for us. We are upgrading our customers across the Caribbean in our fixed networks, and we kept them connected. We will be focused on really making sure that we deliver the services we need to deliver to them. So very, very positive on the fixed side of the business. For SMB, you see two things happening. In Q2, we were able to keep our SMB customers connected. We are there to help them through this pandemic. At the same time, we will also see new businesses started up, and we will be there for the new businesses that are emerging in the Caribbean to partner with them as they shape up the new business landscape in a digital world. So both on the fixed side and the B2B SMB side, we see good signs.

Thank you, Inge.

Our last question comes from Matthew Harrigan.

Thank you. There seems to be a consensus on the Street that when you get into 2021, whether it’s vaccines or therapeutics, you can see some light on COVID, but you’re certainly still having a rough in the interim with Chile and winter and all that. I guess one of the risks specific to your markets is some of the governments have very limited fiscal resources to subsidize the consumer for a while as has been done in the U.S. Is there a possibility we could get a more violent dip-off over the next couple of quarters, even if longer term your business looks great? And then, secondly, when you look at the M&A opportunities and you've got some large multinational telcos, some of whom you've done deals with are looking to exit the region. I mean, you’ve got a very thin equity layer. You need to finance the multiple points or so with the synergies. Is there an imperative to try to get some of those deals done over the next year? I mean you said you don't want to grow just for the sake of growing and Chris certainly articulated a 4x leverage goal, ultimately. But do you feel like this is kind of a historic opportunity over the next 12 months where there’s a lot of dislocations to get more M&A done before the market bumps up? Or are you more inclined to bide your time given that you’ve got two nice deals already in the hopper?

I’ll start with the second one, and then maybe I’ll ask Chris to also share his thoughts on this. There are many opportunities, but we are patient. We don't have to do any deals. When we look at a transaction, we, of course, look at our balance sheet and how we want to capitalize ourselves to take advantage of any dislocation, but it's also got to work from the sense that it's got to be priced right. It’s got to be a business that generates cash or has the potential to generate lots of cash, and it’s got to have a path where we can clearly see how the business grows and how savings come out of it. Once you put all those filters on it, you're down to a really small handful of assets that you really get excited about. Then you've got to work with the sellers to make sure that the seller also sees the excitement of wanting to part with those assets, right, at the valuation we think makes sense for us. There are quite a few deals where we’d say to the seller, for it to make sense for us, it will never make sense for you, and let’s not waste too much time talking to each other. We are going to be disciplined that way. Now on the government front, almost all the governments that we work with in the countries that we operate have been quite prudent and have been making more right decisions than not. Many of them have help on the IMF. Some of the governments have really strong balance sheets, and they will just power through this. We’ve been working very closely with them. My GC, John Winter, and his regulatory team are very close with the governments. We keep track of their balance sheets and the actions they've been taking. We are here to support them as well. I don’t see that as a cloud space. I think if you look – if I look at the cloud space, it would just be mostly the macro around tourism in some areas. If you look at Chile, it's commodities and currencies. That’s how we look at it. Chris?

No. I think you hit it on the head.

Thank you, Matt.

Our last question comes from Michael Rollins with Citi.

Hi, good morning. I was wondering if you could take a step back with the strategy as you’re going to have in more markets, both fixed and wireless operations. Is there a holistic way that you think about the growth rate of that presence in the country by having all of those services differently than if you had one or the other?

I think, yes, we would look at it differently. Maybe I'll ask Betzalel, my Chief Operating Officer, to make some comments here as well. Certainly, the way we look at it, when you have a portfolio of products like this, is what are the attach rates between them. You use one to drive the other. When we buy, like the Telefónica Costa Rica asset, you look at it and you say, okay, X amount of mobile customers – postpaid customers have our fixed product and Y amount or Z amount of our fixed customers have the mobile product, and you just take one minus Y and one minus X, and then you do the math, then you say, okay, I can get to X percentage of attach rate, and that's your revenue synergies. We think there's huge opportunities in many of our markets. We've been very successful in some and in some we are just in the early stages of testing out different fixed-mobile type plans. Same thing applies, by the way, to the AT&T asset in Puerto Rico. Naji and Betzalel are already cooking up a whole bunch of offerings that we think, as soon as we take ownership of that asset, we can launch some things that are really compelling for the mobile subscriber and the fixed subscriber. Betzalel, do you have anything you want to add to that?

Thank you, Balan. I think you’re spot on. But one thing to mention, especially on the two acquisitions that we’re discussing is the fact that most of our mobile customers in those two operations are postpaid. That is the best base to create that synergy or offering of fixed-mobile convergence. That’s why we believe those two acquisitions will give us a great opportunity for FMC offering and create the revenue synergy. As Balan said, we are planning it into different markets. The attach rate, when we talk about postpaid, with fixed starts showing some very good signs.

Thanks, Betzalel. And FMC, it's big mobile convergence for some of you. Yes. I think that's – is that our last question, operator?

That will conclude today's question-and-answer session. I'd like to hand back to Balan Nair for any closing or additional remarks.

Thank you, operator. I should end with a few comments. One, our business is good. We have products that everybody wants. I think we have a unique value that customers really appreciate, and we have employees that are really motivated. Our goal is to create value for our shareholders. Certainly, we want to create value for our employees. And for sure, absolutely, there's going to be value creation for our customers as well. We plan on doing that. We think we have a good strategy in place. We have a good team in place, and we will execute on it. I want to thank all of you for your support. Have a great day.

Ladies and gentlemen, this concludes Liberty Latin America's Second Quarter 2020 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Latin America's website. There you can also find a copy of today's presentation materials.