Liberty Latin America offers asymmetric turnaround upside from recurring connectivity and subsea assets, but Puerto Rico leverage and execution risk keep the equity highly binary.
Overview
Liberty Latin America (LILAK) is a regional telecommunications utility with recurring broadband, mobile, pay-TV, enterprise and subsea wholesale revenues across the Caribbean, Panama, Puerto Rico and Costa Rica. Its competitive position rests on 97% gigabit-ready fixed coverage, spectrum assets, approximately 40% FMC penetration and a proprietary subsea loop serving more than 30 countries. **Q2 2026 showed operational recovery:** revenue was $1,102.6 million, Adjusted OIBDA rose 5% reported to $436.0 million, margin expanded 130 basis points to 39.5%, and adjusted FCF before noncontrolling-interest distributions improved to $83 million from negative $41 million. The principal issue is leverage: $8.53 billion of debt against $746.9 million of cash produced 4.6x consolidated net leverage, with Puerto Rico at 8.0x reported net leverage. The base FCFF DCF indicates $9.20 per share versus the $8.39 reference price, while the five-year base scenario reaches $13.80 and the probability-weighted target is $14.72. Near-term catalysts include the Amdocs 10-year IT deal, Costa Rica’s proposed Millicom merger, Puerto Rico stabilization, debt reduction, Maya-1.2 monetization and Project Manta by early 2028. Sell-side consensus remains cautious at Hold and $6.70.