Liberty Global, the parent company of Flow and Cable & Wireless, plans on separating its Caribbean and Latin American businesses into a separate corporate entity by the end of the year, the telecommunications company announced in recent U.S. Securities and Exchange Commission filings.
The move will likely lessen Liberty Global’s tax bill in the U.S., according to the SEC filings, which state that the separation will consist of a number of transactions that are “intended to qualify as tax-free spin-offs for U.S. tax purposes.”
Liberty Global, which predominately operates in European markets, has also touted the move as a way for the Caribbean and Latin American businesses – collectively known as LiLAC – to raise capital independently, and for its shareholders to invest directly in higher-growth Latin American markets.
LiLAC will be a publicly traded company run by Balan Nair, who has been with Liberty Global since 2007.
“After the split, we will be a separate company but will still be able to benefit from Liberty Global’s resources,” Mr. Nair said during a third quarter investors conference call.
Liberty Global originally agreed to purchase C&W – which operates telecommunications services throughout the Caribbean – in Nov. 2015 for US$5.3 billion as a way to increase the company’s global footprint. Altogether, Liberty Global’s Latin American and Caribbean businesses operate in more than 20 jurisdictions under the consumer brands VTR, Flow, Liberty, Más Móvil and BTC. In addition, LiLAC operates a sub-sea fiber network throughout the region connecting over 40 markets.
The conglomerate has a yearly operating cash flow of approximately US$1.5 billion, but recorded operating losses of around US$202 million during Q3 of this year. The losses were due in large part to damage wrought by hurricanes Irma and Maria.
“Our long-term opportunity in Latin America continues to be exciting and we remain on track for the split-off to LiLAC shareholders around the end of the year,” Liberty Global CEO Mike Fries said during the Q3 conference call.