For Liberty Latin America Ltd. (LILA), things have not been that great, mainly in its Puerto Rico operations and the failed experiment in Chile. While the company has some good assets, execution on the part of management has made any hope for a turnaround quite dubious.
Liberty Latin America Ltd is based in Colorado and is one of the largest companies focused on providing telecommunication services, offering connectivity and entertainment to regions of Latin America and the Caribbean. Established in 2018 as a corporate split-off from Liberty Global, the company stands out with footprints in more than 20 countries providing fully integrated services like broadband internet, mobile telephony, and digital television under different consumer brands like Flow, VTR, and Más Móvil.
Liberty Latin America offers mainly fixed-line and mobile telecommunications, broadband Internet, digital video, and managed services. Revenue is primarily generated through triple-play and quad-play bundle services, wholesale connectivity subscription revenue, and media companies advertising.
Liberty Latin America serves residential customers as well as small to medium-sized businesses and corporate customers. The company mainly caters to an end market of households that require reliable telecommunications solutions in the fast-growing Latin America and Caribbean markets. These strategic focuses on increasing broadband penetration and improving mobile services will place Liberty Latin America in an excellent position for the growing demand for connectivity in these regions. Still, this potential has not been exploited fully due to poor management, especially in Chile and Puerto Rico, which has prevented the company from succeeding.
LILA investors have gone through a tough ride, especially considering the long-running woes in Puerto Rico and the debacle in Chile. Not that things started on a smooth path after the acquisition of Puerto Rico business from AT&T, the issues of execution continue to emerge, and a successful turnaround is becoming increasingly unlikely. A significant debt load in Puerto Rico poses a further threat of rendering the business worthless, akin to what happened in Chile, with no value left for shareholders. With the stock price now lower than the sum of its other businesses, it’s a tough call, but management’s poor track record is making it hard to stay confident.
Our bearish thesis rests on continuing issues in Puerto Rico and Chile since that’s seriously depressing the future of Liberty Latin America. Until we see substantial progress here soon, not much suggests a positive outcome in that regard. With management struggling to deal with the piling debt, this is beginning to turn into one of those investments we would rather walk away from.
Liberty Latin America Ltd. is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held LILA at the end of the second quarter which was 15 in the previous quarter. While we acknowledge the potential of LILA as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as LILA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
