C&W parent completes Caribbean split-off

Cable & Wireless parent company Liberty Global announced last week that it has completed the separation of its Latin American and Caribbean businesses – including the Cayman branch of Flow – into a separate entity called Liberty Latin America.

The move was made in part to lessen Liberty Global’s tax bill in the U.S., according to U.S. Securities and Exchange Commission filings, which stated 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 to raise capital independently, and for its shareholders to invest directly in higher-growth Latin American markets.

“I see tremendous opportunity to bring world-class technology, innovation and scale to our operations, expand our network coverage, and deploy exciting new service offerings to our residential and business customers,” said Liberty Latin America CEO Balan Nair. “In a region that is currently served by a highly fragmented range of operators and with customer penetration rates roughly half of more mature markets, we see significant prospects for long-term growth both organically, as well as through strategic M&A.”

Liberty Latin America stock was trading on the Nasdaq Global Select Market at around $21 per share as of Tuesday.

The new entity serves a total of 6.4 million homes and 3.7 million mobile subscribers, according to its announcement.

Liberty Global originally agreed to purchase C&W – which operates telecommunications services throughout the Caribbean – in November 2015 for US$5.3 billion as a way to increase the company’s global footprint.

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, Liberty Latin America operates a sub-sea fiber network throughout the region connecting more than 40 markets.

The conglomerate expects to generate annual revenue of roughly US$3.7 billion, but recorded operating losses of around US$202 million during the third quarter of 2017. The losses were due in large part to damage wrought by hurricanes Irma and Maria.

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