Author Topic: LBTYA - Liberty Global  (Read 128955 times)

ni-co

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Re: LBTYA - Liberty Global
« Reply #20 on: August 08, 2014, 03:11:48 PM »
Yes. That's exactly why you want to have highly predictable cash flows. Malone likes to leverage his companies up to the hilt when money is cheap. He's really a master at it.


Wilson-TPC

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Re: LBTYA - Liberty Global
« Reply #21 on: August 08, 2014, 05:04:39 PM »
Yeah but FCF yield is a better measure using EV rather than market cap.
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dwy000

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Re: LBTYA - Liberty Global
« Reply #22 on: August 08, 2014, 06:49:40 PM »
Isn't FCF calculated after paying interest - ie servicing the debt? FCF should technically be the cash available for shareholders. So wouldn't FCF be more appropriate compared to market cap.

Liberty

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Re: LBTYA - Liberty Global
« Reply #23 on: August 08, 2014, 08:21:21 PM »
John Malone talks about levered free cash flow:

Quote
Definition of 'Levered Free Cash Flow'

The free cash flow that remains after a company has paid its obligations on its debt. The levered cash flow represents the amount of cash left over for stockholders and for investment after all obligations are covered. The levered cash flow can be negative while the operating cash flow is positive if the amount of cash paid to cover obligations exceeds the cash that comes from operations.
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Wilson-TPC

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Re: LBTYA - Liberty Global
« Reply #24 on: August 08, 2014, 08:38:46 PM »
True that makes sense. My mistake.
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ni-co

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Re: LBTYA - Liberty Global
« Reply #25 on: August 08, 2014, 10:51:04 PM »
John Malone talks about levered free cash flow:

Quote
Definition of 'Levered Free Cash Flow'

The free cash flow that remains after a company has paid its obligations on its debt. The levered cash flow represents the amount of cash left over for stockholders and for investment after all obligations are covered. The levered cash flow can be negative while the operating cash flow is positive if the amount of cash paid to cover obligations exceeds the cash that comes from operations.

Yes. They are using "net cash provided by operating activities" as a basis and do not add back paid interest. It's not totally "free", though:

"We believe that our presentation of FCF provides useful information to our investors because this measure can be used to gauge our ability to service debt and fund new investment opportunities. FCF should not be understood to represent our ability to fund discretionary amounts, as we have various mandatory and contractual obligations, including debt repayments, which are not deducted to arrive at this amount."

ni-co

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Re: LBTYA - Liberty Global
« Reply #26 on: August 10, 2014, 04:58:08 AM »
Some food for thought: I hadn't been aware of the g.fast technology until recently. It's going to allow telcos to push their speeds up to 1 Gbps over their copper wire for the last 100m to the home and seems more or less ready to be deployed in 2015.

http://www.ftthcouncil.eu/documents/Publications/DandO_Gfast_Paper_2014_Final.pdf

A big part of my investment thesis on cable companies rested on the assumption that telcos are forced to significantly increasing capex over the next few years to deploy fibre to stay competitive with the cable companies. Although cable can reach speeds up to 10 Gbps under the DOCSIS 3.1 standard, this gives the telcos a breather of at least a few years.

Liberty

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Re: LBTYA - Liberty Global
« Reply #27 on: August 26, 2014, 07:22:28 AM »
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merkhet

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Re: LBTYA - Liberty Global
« Reply #28 on: August 26, 2014, 10:14:47 AM »
I was looking for this earlier, but it turns out it was in the LMCA thread:

There is no Liberty Global (LBTYA) message board that I could find, so I thought I would post this here. This is an excerpt about Liberty Global from Dan Loeb's latest letter


"During the First Quarter, we increased our exposure to LBTYA, Europe's largest cable operator, following the announcement of its acquisition of VMED. The acquisition triggered a wave of investments by arbitrageurs, who created an attractive entry point for us by putting pressure on LBTYA shares. Initiating a position in VMED allowed us to purchase LBTYA at a material discount to its pre-announcment pro forma trading levels.

Our initial interest in LBTYA was spurred by multiple catalysts and favorable geo tailwinds. Relative to the US cable market,Europe offers materially higher volume growth, lower churn, and meaningful penetration opportunity. Before yearend, we expect catalysts in the stock to include the closeing of the VMED deal, the initiation of a substantial buyback plan, and the unveiling of accretive wireless and B2B initiatives. The wireless mkt in LBYTA's key West Europe markets generates over $73 bill of annual rev, presenting LBTYA with the opportunity to redifine the MVNO market, leveraging a unique WiFi footprint, full back office and system control, and attractive quad play bundles. LBTY also appears poised to ramp up its B2B efforts, particularly in Germany.

We believe Libertyís strategic value as the primary alternative to the incumbent telecom operatorís fixed infrastructure in its markets is overlooked. The growth of mobile broadband will put pressure on carrier spectrum allocations, enhancing the importance of WiFi offload and wireline backhaul infrastructure. In a mobile broadband world, having a strong ground game is more important than ever for wireless operators and European cable players are well‐positioned with dense, upgraded fiber infrastructure offering considerable headroom.

In our analysis, pro forma Liberty Global could generate more than $6 per share of free cash flow in fiscal 2014 when factoring in the considerable buyback plan announced along with the acquisition. Through VMED, we had the opportunity to create Liberty Global at slightly more than 10x FY2014 free cash flow per share, giving us the cheapest free cash flow multiple in European cable in a deal that will be free cash flow accretive and meaningfully de‐leveraging to Liberty. Despite the move in the shares following the VMED announcement, Liberty Globalís relative value remains attractive, especially given the recent appreciation of its European cable peers and the interim appreciation of slower growth, mature cable operators in the United States. We believe the shares could trade toward 15x pro forma 2014 free cash flow per share and compound at ~20% per year following the closing.

Note that this was pre-split, so post-split, Loeb is thinking more than $3.00 per share of free cash flow. Pretty close to the annualized FCF ni-co mentioned earlier.

merkhet

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Re: LBTYA - Liberty Global
« Reply #29 on: August 26, 2014, 02:07:39 PM »
Has anyone heard anything (delay, cancellation, etc.) about the Liberty Global spinoff of VTR & Liberty Cablevision in Latin America? They mentioned this in March 2014 @ the Morgan Stanley TMT conference and again on the 2014Q1 conference call, but strangely no mention of it on the Q2 conference call.

Could be interesting. They mentioned that the company only does about $0.5 billion in EBITDA, which, on a company of $8 billion in EBITDA, isn't insignificant, but I could see it being overlooked if spun off.