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Good morning, ladies and gentlemen, and thank you for standing by. Today's call is being recorded.
I will now turn the call over to Inge Smidts, CEO, Cable & Wireless. Please go ahead.
Good morning, and welcome to Liberty Latin America Third Quarter 2019 Investor Call. [Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Latin America's website at www.lla.com. [Operator Instructions] 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 fact. 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 such 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 appendix to this presentation and on our Investor Relations website.
I would now like to turn the call over to our CEO, Mr. Balan Nair.
Thank you, Inge, and welcome, everybody, to our third quarter results presentation. As usual, I am joined by my senior leadership team from across the region, while we will get them involved as needed during the Q&A.
The structure of this call will be familiar to you. I'm going to start by taking you through our highlights and operating results for the third quarter before wrapping up with a strategic update. Chris Noyes, our Chief Financial Officer, will then follow through with some prepared remarks reviewing our financial performance and touching upon our 2019 financial guidance, which I'm pleased to say we are reconfirming with these results. After that, we will get straight to your questions. As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com.
Let me start on Slide 4 with our key highlights for the third quarter. We continue to deliver solid operational performance, adding 67,000 fixed and 13,000 mobile subscribers in Q3, which brings our combined year-to-date additions to over 270,000. This represents a significant increase compared to the first 3 quarters of 2018, and it's a clear indicator that we are improving our commercial execution.
Our financial performance was solid in Q3, generating $967 million of revenue and $380 million of OCF. Note that these figures were impacted by Hurricane Dorian. Also, the quarter's rebased revenue and OCF growth rates were negatively impacted by the FCC funding we received last year in Puerto Rico. Chris will take you through the respective details in his slide. More importantly, we are reconfirming our financial guidance for the year.
Next, we continue to focus on our customers and have a number of new products and propositions launches coming up, including an exciting new video platform for VTR in Chile based on the Liberty Global Horizon platform. We also have a cloud-based Android solution for Puerto Rico, which we then plan to roll out across many of our markets.
In addition to investments in products, we continue to expand our leading networks. We added or upgraded over 100,000 homes in the third quarter, taking our year-to-date activity to over 340,000 homes, and we are increasing LTE coverage across our mobile networks.
Finally, we took a significant step forward with our inorganic strategy through the announced acquisition of AT&T's assets in Puerto Rico and the U.S. Virgin Islands. I'll cover why we are excited about this acquisition later in the presentation.
And yesterday, we also announced the disposal of our Seychelles business, which was our last noncore operation outside of our focus region, for an enterprise value of $104 million. So overall, in the third quarter, we continued to deliver solid operational momentum and made great progress on the inorganic growth front. In the next slides, I'll provide an update on our 3 business segments: fixed, mobile and B2B.
Turning to Slide 5. Our fixed business representing half of our revenue. I think the numbers here speak for themselves. Our RGU additions continued to build strongly. Across Cable & Wireless and VTR/Cabletica, we saw improved Q3 numbers compared to the prior year driven by growing penetration of our expanded footprint as well as improved execution, particularly in Cable & Wireless, where we more than doubled additions year-over-year.
VTR Q3 performance at 15,000 net adds for Q3 was also a significant step-up versus 2018, where the quarter yielded only 3,000 net adds. In Puerto Rico, while our Q3 net adds were lower than the prior year when we were recovering from the 2017 hurricanes, our year-to-date net adds are strong and nearly double our 2018 numbers. Importantly, we added more subscribers sequentially in Q3 and see the business continuing to grow well with record-low churn numbers.
From a product perspective, broadband is the main driver of additions, representing nearly 2/3 of the total. And we do this by providing leading speeds, great WiFi coverage and reliability of all important product features for success.
Given the strong returns, we have increased our upgrades and newbuild program this year, with our year-to-date activity running 30% ahead of last year. In terms of speeds, we remain the leader in a number of our markets, with VTR customers receiving average speeds of 230 megabits per second in the third quarter '19 versus 160 megabits in third quarter '18. As a group, our quarter-to-date and year-to-date additions were each over 50% higher than the prior year at 67,000 and 207,000 RGUs, respectively.
Moving to mobile and B2B on Slide 6. Taking mobile first, representing just under 20% of our revenue. Our subscriber trends continued to show improvement. In Q3, we added 13,000 subscribers across the group, a significant improvement year-over-year as we continue to stabilize trends in Cable & Wireless. And VTR continued to add subscribers at a consistent rate. We are positive about profit for Q4 as we typically benefit from strong seasonal uplifts, and we are confident about our performance in many of our markets, particularly Jamaica.
Year-to-date, the mobile subscriber story is even more positive with a string of nearly 200,000 net adds, highlighting the benefit of our operational changes. In our more challenging mobile markets of Panama and the Bahamas, we also saw both year-over-year and sequential improvement in subscriber trends. Financially, there were negative impacts from Dorian in the Bahamas. However, we continue to see signs of stabilization in our subscription revenue.
As with fixed, the strength of our mobile networks is vital, and investments here has enabled us to reach close to 85% LTE coverage across our markets, up from 75% at the end of Q2. And as you can see in the central chart, our LTE subscribers continued to grow strongly year-over-year, reaching 46% of our subscribers at the end of Q3. Sequentially, we also grew our LTE base by over 120,000 or close to 10 percentage points.
Moving to B2B, on the right-hand side of the slide, representing about 30% of our revenues. B2B was up 1% on a rebased basis in Q3 to $300 million. This growth once again represents increasing data demand partly offset by legacy product headwinds. We saw strong growth in our C&W B2B-only markets, shown here as Lat Am as well as from smaller bases in VTR and Puerto Rico. In our other C&W markets, there's an element of phasing here as we anticipate some key projects to come through in Q4, delivering a strong growth for the year. Finally, we continue to see a significant opportunity to drive greater market share in our markets outside Cable & Wireless, which currently comprises the bulk of our B2B business.
On Slide 7, I wanted to run you through the acquisition of AT&T's operations in Puerto Rico and the U.S. Virgin Islands and provide some color as to why we think it is such a good one for us. This transaction is valued at $1.95 billion, representing a multiple of mid-6 of OCF before synergies and about 1 turn lower, if you were to adjust for full run rate synergies.
It's a compelling valuation. The combination will bring together the leading mobile and fixed players in Puerto Rico, adding 1.1 million mobile subscribers to our strong existing cable base. As I've highlighted previously, free cash flow accretion on a per-share basis is a key metric we look at in assessing investment opportunities, and we expect this to be a great transaction from this perspective.
We will also add to our leading and resilient high-speed infrastructure on the island with AT&T's network further reinforced by significant investments that they have made over the last few years. For example, approximately 95% of AT&T's towers are connected with fiber and over 70% of that fiber is buried underground, significantly increasing the resiliency of our operations.
As with any in-market combination, we anticipate this transaction will generate significant synergies that will underpin our future financial performance. As you would expect from us, we have thought through the ownership transition in extensive detail and agreed to a comprehensive transitional services agreement with AT&T, which will last up to 36 months depending on how soon we get to cut it over. And finally, as we will discuss later in the presentation, we have already raised the debt component of our funding for the transaction in a heavily oversubscribed capital raise.
On Slide 8, consistent with previous presentations, I wanted to close by taking you through our business priorities and the progress we have made. We're still just shy of 2 years into life as Liberty Latin America, and I'm proud of the progress we've made in building our team and culture. We have a very engaged Board, an experienced leadership group and a strong operating management team down many levels; many were brought in, in the last 18 months. Our operating model and ways of working is enabling a culture of collaboration and one team. Never was this more evident than in the way the team rallied behind the Bahamas post-Hurricane Dorian. And we are seeing increased engagement levels throughout the organization as we seek to deliver strong results across the group.
As I covered earlier, we are delivering improved operational performance. There's more to do here, and we continue to see significant opportunities in certain markets and product areas. This remains a key focus for us. We are very committed to transforming our business to improve our customer experience and drive scale efficiencies over time. Our Panama operations center is a key component of this priority. And we are rapidly scaling up here. I'm very pleased that in addition to Kerry Scott, our Chief People Officer, we announced last week that Betzalel Kenigsztein, our Chief Operating Officer, will be moving from Denver to Panama, further demonstrating our commitment to building a scalable operations center firmly in the heart of Latin America.
Next to M&A, where we see a lot of accretive opportunities in our region. We are excited to have secured such a good one with the AT&T transaction, which is a great example of our focus and discipline in making the right acquisitions. And as part of the financing for the transaction, we further strengthened our balance sheet, which Chris will cover shortly.
Overall, I am happy with our progress. We are well positioned as we head into Q4 and look forward to taking some good momentum into the New Year.
With that, I'll now pass you over to Chris Noyes, our Chief Financial Officer, who will talk you through our financial performance before we take your questions. Chris?
Thank you, Balan. Starting with the upper half of Slide 10. The orange bars highlight our reported Q3 revenue of $967 million and OCF of $380 million. These results represent reported year-over-year growth of over 4%, helped largely by the inclusion of Cabletica and UTS. And in terms of rebased growth, we posted a revenue decline of 1% and an OCF increase of 1%. Our growth was adversely impacted by $16 million in revenue and $19 million in OCF as a result of Hurricane Dorian and prior year FCC funding.
Our P&E additions totaled $187 million in Q3 or 19% of revenue as compared to $170 million or 18% of revenue last year. Higher CPE spend related to our improved subscriber gains and investments in mobile capacity contributed to our year-over-year growth in P&E additions.
Moving to the bottom right. We generated $4 million in adjusted free cash flow, bringing our year-to-date total to $120 million. Our Q3 result is lower as compared to Q3 2018 because we realized roughly $30 million in last year's adjusted FCF from insurance advances and the FCC funding.
We remain on track to deliver our 2019 financial targets, even with the negative impact of Hurricane Dorian. Just to reiterate our targets: first, OCF greater than $1.525 billion at our February 20, 2019 FX levels, including a Chilean FX rate of CHP 670. Importantly, our year-to-date OCF would have been nearly $10 million higher if we have applied our guidance FX rates. Additionally, while FX volatility may impact our reported OCF, we reaffirm the statement we made on our 2018 year-end earnings call that our 2019 OCF guidance implies low to mid-single-digit rebased OCF growth. Second, P&E additions as a percentage of revenue of approximately 19%; and third, adjusted free cash flow of approximately $150 million.
Turning to our 3 reportable segments on Slide 11. Starting on the left, C&W delivered $596 million of revenue, down 2% on a rebased basis, which is broadly in line with our Q2 performance if adjusted for Hurricane Dorian. Impacts from the storm in Q3 were $5 million to revenue, $8 million to OCF and $5 million to P&E additions. As in prior quarters, mobile revenue remained challenging year-over-year, especially in Panama, although we continue to see signs of stabilization. Largely offsetting the mobile decline, we continued to deliver rebased revenue growth in fixed primarily driven by the strength of our broadband business and on the B2B front, helped by increases in managed services revenue.
C&W reported 2% rebased OCF growth, with $236 million in the quarter approaching a margin of 40% as our focus on cost efficiency continues. For the quarter, P&E additions were $119 million or 20% of revenue and included over 40,000 new or upgraded homes.
Moving to our VTR/Cabletica segment. We posted rebased growth of 2% in revenue and 4% in OCF, bringing revenue to $268 million and OCF to $109 million. Top line growth was supported by volume increases across consumer broadband and mobile and B2B, while OCF growth was also helped by decreases in interconnect and mobile access costs. Our P&E additions were $49 million or 18% of revenue, which is consistent with the prior year and included over 60,000 new homes passed.
And with respect to our Puerto Rican segment, LPR delivered another strong quarter, helped by 33,000 organic subscriber additions year-to-date, LPR generated revenue of $104 million, OCF of $51 million and P&E additions of $17 million or 16% of revenue.
Switching to the right part of the slide, we show our quarterly OCF progression. As we flagged in Q2, our comparison in the second half of this year will be more challenging due to the $11 million in FCC funding received in Puerto Rico in Q3 2018 and the $64 million in insurance settlements recognized in Q4 of 2018, as represented by the highlighted bars.
Moving to Slide 12 and building upon Balan's earlier comments. We successfully completed a $2.2 billion Puerto Rican financing in October, which was well received by both U.S. high-yield and bank investors and followed credit upgrades by all 3 rating agencies, reflecting the enhanced credit profile of the combined Puerto Rican business. We raised a 6-year $125 million revolving credit line, a 7-year $1 billion term loan and an 8-year $1.2 billion secured bond. This capital raise has enabled us to refinance our existing $923 million in Puerto Rican term loans, which had maturities in 2022 and 2023 and as highlighted by the chart, extends our average tenor on an adjusted basis to over 6 years. The residual $1.3 billion from the financing will be placed in escrow and will ultimately fund a significant portion of the AT&T purchase. Beyond the debt raise, we will require roughly $750 million to fund the purchase, including season expenses. And this is intended to come from our existing $2 billion of cash and available liquidity on our balance sheet.
Adjusted for the transaction, we would expect our consolidated net leverage ratio at LLA to be in the mid-4s, about 0.5 turn higher than Q3's ratio of 4x, a comfortable level that we believe works well from a levered equity return perspective and one that we anticipate will decline over time as we continue to grow OCF across LLA.
Next to Slide 13 and our concluding remarks. We continued our operational momentum in Q3 with strong subscriber additions. Building on this momentum and some phasing of B2B activity, we anticipate a strong finish to 2019. Looking further ahead, we announced a highly strategic acquisition in Puerto Rico, which should drive strong free cash flow accretion in the future. And lastly, we are reconfirming our 2019 finance guidance targets.
With that, operator, we are ready to take questions.
[Operator Instructions] Our first question comes from James Ratcliffe.
One on M&A and one on the operations, if I could. On the M&A side, can you talk about the sources of the synergies that you're expecting to get out of the transaction? And any sort of time frame? And also if there are any sort of dis-synergies we should be looking for, sort of upfront investments and the like? And secondly, you mentioned in the release on the B2B side, part of the offsetting drag to managed services growth is declines in the voice business. How big is that business? And what sort of decline are we looking at there?
Sure. Thanks, James. So on the M&A front, on the AT&T deal, I'm assuming that's what you're asking about. The synergies that we indicated is about 1 turn, and it comes from a number of different areas. But one of the big ones is really the TSA agreements that we have with AT&T. As we roll off those TSA agreements and bring those services in-house, I think you'll see -- we'll definitely really see some pretty good numbers there. As well, there's a lot of work that we are doing internally to strengthen our networks. I think that we certainly defer with the combined networks. And as we also solve for some of these needs for AT&T, there are synergies across the large group as well. The core network, we can now use for the rest of the Caribbean, et cetera. So we see this coming from many different range. And I think the 1 turn that we've indicated is a good number. And I feel really, really good about it.
The second question on operations, on the voice side. Yes, this is a common thing across all cable industry right now. Certainly, the telcos experience since 5 years ago. We've kind of peaked out on voice adds, and we're starting to see some of the erosion there. And you see it in primarily our bundling ratio. The bundling ratio continues to contract a little bit, and it's mostly on the backs of voice disconnects; or more importantly, as we bring in new customers, increasingly, new customers are coming in without the voice product.
But we've kind of modeled all of that in already, and the incremental net adds that we see far outweigh the losses on voice. The broadband product is really a driver.
Our next question comes from Soomit Datta from New Street Research.
A couple of questions, please. One on Puerto Rico. I was hoping you could just give us a quick update on how you see the broader demographic situation. I've heard slightly different conflicting things in terms of population, kind of growth and contraction. And maybe also, how do you see the sort of broader demographics going forward. What is built into your assumptions? I'm assuming you're reasonably upbeat given the capital deployment in the country, but it'd be interesting to get some thoughts from people who've been on the ground. And then the second thing, please, was just an operational question on Panama. I mean you've talked a couple of times about stabilization in the market on the wireless side, I guess, we're talking. But if I look at the numbers, they still seem to be under some pressure in terms of revenues, and the subscriber count on wireless is ticking down still. So I just wondered how close are we to the bottom. And as a part of that, what are your thoughts on consolidation? Is there any kind of update there?
Sure. Thanks, Soomit. On Puerto Rico, I'd say we are really bullish on Puerto Rico. It's one of our best businesses, and we have an amazing management team on ground as well in Puerto Rico. And you can clearly see by our capital allocation -- and we are all in there, and we feel really good about it. And I'll ask Naji to also include some comments on that while I answer the Panama question, and then I'll pass it back to Naji to give a little bit more color on why we're bullish on the ground.
On Panama -- and broadly, in the mobile business, what you're seeing is really an erosion and a lot of churn in the prepaid market and really, real price compression, specifically in Panama on the prepaid market. We said it a number of times. It's a question not on whether that product is a good product or a bad product, but just too many competitors. And we haven't called the bottom yet on that, but I think we're pretty close to it. You'll see 2020, we'll comp against some better numbers. And we think Panama consolidation will happen sooner rather than later. We have a new regulator appointed by the President. I think we'll -- we are hoping they'll come up with a much more friendly interpretation of the law that was passed, and that could probably pave the way for the concept consolidation to actually happen. I'll pass it back to Naji. Naji, do you want to give maybe some color on the ground and why we're really bullish on Puerto Rico?
Thank you, Balan. Sure. I mean if we look at where we stand today in Puerto Rico for the first 9 months of the government fiscal year up to June, our numbers that we're seeing indicate clearly that migration is flat to slightly positive. We're not assuming that it's going to be a complete reversal of migration, but we're not seeing the massive decrease that we have seen in the past, specifically prior to the hurricane and, of course, after the hurricane.
There are a few other key indicators we look at. We're seeing an improvement in unemployment. Also there is a very clear path from the fiscal board in terms of renegotiating the island debt. There was a proposal on the table in front of the judge in New York. We believe it's going to be favorable. That will cut the debt significantly, which in turn, should cut the amount of debt service the government will have to be paying in 2020 and as such, we believe they're going to be able to go back to the capital market in 2021.
Having said all that, so our view is optimistic. We're not overly optimistic, but we believe we have what it takes to operate in the environment. It has been the case for many years, and we've been quite successful. I'm confident that we'll be able to continue on that trend. So again, we're carefully optimistic. But so far, the key indicators are heading in the right direction.
Our next question comes from Michael Rollins from Citi.
Curious if you could discuss the longer-term opportunities for margin expansion for the broad portfolio as well as your key operating regions.
Thanks, Michael. This is an area that we are actually quite excited about in our business. We see margin expansions at the operating free cash flow line through both OpEx improvements as well as CapEx improvements. And Chris have given you guidance this year, and we're going to nail it. And come next year, we'll give you a new set of guidance, and we're going to nail that as well. And all that will show to us quite a few points of expansion both on the OpEx side and the CapEx side as well. So that's one we feel really good about in this business.
And our operating leverage continues to improve. You'll see with all the net adds that we are bringing on to the network. At some point in the future, when we've got enough net adds, we are going to bring in to pick up some pricing as well. So our strategy as we've been very consistent about is we are going to go for volume without destroying ARPU, we -- so it's easy to get volume when you want to like just give everything away for free, but we are going to get lots of volume, maintaining ARPU. And then at some point in the future, we'll start taking the operating increases. But we feel really good about the savings that we're going to see coming up.
Maybe I'll ask Chris to give maybe a point as well as on the margin expansion.
Yes. I mean I think we had -- and just to reiterate for folks, a big part of our focus is around OpEx to revenue, and our medium-term target is to run the collective business in the low 30s as a percentage of revenue versus we're upper 30s today. So that is a key focus area for us, and I think that will underpin OCF or EBITDA growth going forward.
And in addition, as we look at, let's call it the OCF less CapEx or OF/CF ratio, our goal as a company is to be in the mid-20s as a percent of revenue. We finished in 2018 at 19%. So we have room to go on that, and that means driving down CapEx as a percentage of revenue on a go-forward basis.
Our next question comes from Kevin Roe from Roe Equity Research.
A couple of quick questions. First, on Hurricane Dorian. When do you expect to return to a pre-hurricane run rate? What work needs to be done yet? And on the Seychelles sale, what are the expected use of proceeds, you're going to keep that on the balance sheet or potentially pay down some debt?
Well, thanks, Kevin. On Hurricane Dorian, we think sometime next year, we'll get back to pre-hurricane levels. There is 2 parts to the story. Of course, the Grand Bahamas island that we are focused completely rebuilding, we are already getting there. And a lot of our B2B customers are coming back, our fixed network's being built. Mobile network is being set up. Then that's the other islands of Abaco, where it's really a huge humanitarian disaster there. There's hardly any commercial activity and -- but that will come back.
That may take a little bit longer, but it wasn't one of our bigger revenue stream islands anyway. But we are focused on bringing some new technologies there that reduce our cost of construction, so a lot more fixed wireless and so on. But we feel good about the Bahamas. I feel really good about my team as well and how we responded to that.
On the Seychelles disposal, I'm going to ask Chris to make a comment on that. We're pretty excited about that disposal. And you can imagine where we would put that cash to work to. Go ahead.
Okay. On the disposal proceeds, we would intend not, at this point, to pay down debt. We'll use the net proceeds as part of the cash we need to fund the AT&T purchase.
And our last question comes from Andres Coello from Scotiabank.
Yes. Just for purposes of comparing the acquisition in Puerto Rico to other acquisitions in the region and also to adjust for IFRS 16. I was wondering if you could disclose operator leases for AT&T in Puerto Rico, please, if you can tell us how much, particularly tower leases, tower commitments in Puerto Rico? That will be my first question.
Okay. Well, we won't -- we can't disclose fully all the details there. But we are inheriting a network there. A lot of the towers have already been leased. So there's a small part of towers that's coming to us, but most of them are already under existing agreements that AT&T does with multiple vendors, and with all the names you would expect. It's not a one vendor there on the ground, on the towers. Is there a follow-up question there, Andres?
Yes. But I hope -- sorry.
Let me just add. I mean AT&T brings its over 600 tower sites, and the lion's share or -- I think it's over 95% of those towers have fiber direct to those tower sites, which is great. And AT&T in the recovery invested significantly around resiliency. So the towers are state-of-the-art on Puerto Rico and USVI.
Okay. But can you clarify if most of the towers belong to the company? Or is it -- or they are under operating...
Yes. Yes -- no, they have been monetized or leased.
Okay. And my second question is on Chile. Obviously, Chile is undergoing a difficult political situation right now. I was wondering if it's -- you have noticed any changes in the competitive landscape in Chile, perhaps a slowdown in terms of sales? And just overall, what's your -- what's the sense of your team in Chile right now?
Sure. And I'll ask Guillermo to jump in here a bit as well. Here's how we feel about it. We love the country and our business there. And our primary focus is really on our employees, on our property, on our services and on our customers. And we want to make sure our services are all up and running, and our customers are well taken care of. So we are continuing to doing truck rolls, repairs, installs. We continue to do that.
On the political front details, this is something that the government and the citizens of Chile will resolve eventually. And it will be okay. I'll ask Guillermo maybe on the ground to maybe give us some color as well. Guillermo?
Sure. Thank you, Balan, and thank you, Andres, for the question. As Balan said, we remain optimistic about the ability of the society to resolve this. Beyond a somewhat complicated end of the month in October, from the logistical point of view, mostly in terms of the markets and all that, we see the general situation turning slowly to normal in November. So we don't see at least -- and we may be a little soon into the consequence of that, we don't see effects -- material effects on local sales, on demand. Actually, as we had a convoluted week then, while we saw the Monday after the complicated week was sort of a spike in the contained demand of those weeks. So our business was not materially affected at all, not the service to the customers and not the distribution channels. All distribution channels are working normally, and we remain confident in continue pushing our good results that we actually had in October despite the fact that we had [ on ticket ] last week of the month.
Thank you, Guillermo. And I can say we are committed in Chile, and we will continue to invest in Chile.
We will take one last question from Matthew Harrigan from Benchmark.
I was curious, as tragic as Dorian was, I mean, if you had altered the trajectory a little bit, it could have hit Nassau or Paradise Island. You alluded to using wireless drops and other elements to reduce your capital cost for newbuilds. But is there anything that gives you pause in terms of the cost of insurance and all that in that region, if we do hit a hurricane cycle -- extended hurricane cycle regardless of global warming? And I think you talked about the opportunity to address a less affluent demographic in Chile with lower homes passed, cost. It seems like that's a decent opportunity as well. And then I guess I shouldn't ask if AT&T would have given you a really good price on Warner Bros. Because I wouldn't -- you probably wouldn't answer that one.
Almost like 5 questions in there, Matt. But let me try and see if I can get to your -- the questions that you want answered. And if I miss something, please jump back. I'll ask Chris to think about the insurance question on Dorian. You asked a question in there on fixed wireless. You kind of dropped off a little bit, you broke up a bit on Paradise Island. We're not doing any fixed wireless in Paradise Island, but we feel good about the fixed wireless solution there. And by fixed wireless, what I mean is really LTE to customers because we have enough capacity. Do you actually do that against the density of population? Certainly in Abaco and Grand Bahamas as well. And but if you need more technical details, we'll be happy to provide and Vivek is right here as well and can answer some more questions on that.
In Chile, you're spot-on. There is a huge amount of customer base that we previously have not targeted. But given how we've driven the cost structure of our construction down, Vivek and his team has done -- just done a really good job. We've been quite innovative on that front. And we find the cost to hold back down quite a bit that we are now targeting a lot of what we call the C and D markets that previously, we've kind of bypassed. And we think the opportunity there is really good. And you can clearly see from the last few weeks, certainly in the region that -- all of the population has same aspirations and needs. And bringing fixed broadband to them, it's going to be a core mission for LLA.
Maybe I'll pass back to Chris to talk about our insurance and the primary efforts that we take taken.
Yes. Matt, around insurance for the region, particularly around, let's call it, wind and nat cat for the Caribbean, we continue to look at how we best optimize and ensure we're getting the highest value for cover. So one thing that we've done over the last year is we've gone forward with a Parametric insurance program, and that allows us to put a competitive process in place between the traditional indemnity market and the insurance fund market for the risk. It minimizes frictional costs and allows us to have a program that we can lay between the 2 different markets. And that basically it's triggered off of a certain wind speed, pays x amount of a defined value. So what that does is it allows us to ensure that, to the extent we have a major disaster, we can have cash coming to the market a lot quicker than what traditionally has been sort of an 18- to 24-or-more months process for the traditional indemnity market.
So we continue to refine our program and continue to look at capacity for the region. And I think we are looking at how we continue to create the most robust risk management program for the money. And we do self-insure, and we do take the first layer of risk on our books as well. So I think we feel comfortable about the places we operate and how we go about insurance, and we'll continue to refine that as we move forward.
That will conclude today's question-and-answer session. I'd like to hand back to Balan Nair for any additional or closing remarks.
Thank you, operator. And I'll say, as we are now 35 days into the fourth quarter. And as Chris and I have reiterated our guidance, we -- seeing the first 35 days, we feel really good about how we're going to end this year. And we continue to thank you for the support you've given us. Have a great day.
Ladies and gentlemen, this concludes Liberty Latin America's Third Quarter 2019 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Latin America's website at www.lla.com. There, you can also find a copy of today's presentation materials.