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General Category => Investment Ideas => Topic started by: Liberty on March 15, 2014, 08:04:36 PM

Title: LBTYA - Liberty Global
Post by: Liberty on March 15, 2014, 08:04:36 PM
This one has been discussed in other places (mostly the LMCA thread), but I think it deserves its own home. I've been looking into it a bit, but it's not a company I understand too well.

I know that many people here own it, and I'd really appreciate it if they shared their thesis on it (I suppose the most common one is probably: Malone is recreating TCI outside the US in cable markets that aren't as mature and a lot more fragmented).

There's a recent overview of Liberty Global here:

http://oraclefromomaha.wordpress.com/2014/03/09/liberty-global-deep-dive-into-media-companies-series-part-1/
Title: Re: LBTYA - Liberty Global
Post by: jay21 on March 16, 2014, 11:50:49 AM
Thanks.  This one is interesting (as are most Malone companies).

As well he should.  LBTYA was built off the carcass of UCOMA UnitedGlobalcom and Fries was the UCOMA COO when Liberty Media International took it over.  UCOMA was a crappily run, family owned business (Gene Schneider then CEO) that got way overleveraged.  Who's the white knight, well John Malone of course.  For those who have been around the block with Malone does this sound familiar (SiriusXM hint hint).

UCOMA valuation (0.2155 shares of Liberty per UCOMA share) was awful in the acquisition and a lot of UCOMA shareholders bailed afterward (me included).  IT was a big mistake.  Freed of the Schneider's meddling and the debt burden, Mike Fries did a great job building out LBTYA.

Thanks for the background, roger.  Do you  have any thoughts on Global atm? I was very interested in this one for the following reasons:

- appeared to be employing a roll up strategy of European assets
- Malone saying even recently that one should diversify away from US and the bargains are in Europe
- does not appear to be over valued based on TEV/EBITDA
- increased buy back

However, I ended up throwing in the too hard pile (for now at least):

- multiple countries = different regulatory environments, demographics, competitors etc.
- my own ignorance of the industry and technology

I have just started to do some real work on Global but the low broadband penetration seems to me to be very enticing.  For example, as of the beginning of 13, the broadband penetration in Germany was 18%.  Based on the 2012 numbers, I could see them adding something on the order of 6mm broadband subs in Europe over time.  With the Virgin Media and Ziggo deals, that number is probably ultimately going to be higher.  Given the margin characteristics of broadband, it seems like that increase in subs would represent a significant driver for FCF growth over time.

Recent BBG article: http://www.bloomberg.com/news/2014-03-12/liberty-global-to-roll-out-pan-european-mobile-platform.html

"Liberty Global will put together a so-called mobile virtual network operator system, or MVNO, the name given to companies that use other carriers’ wireless infrastructure for their own mobile services, Senior Vice President Manuel Kohnstamm said in a interview yesterday in Amsterdam.

“We’re working on a deep MVNO, and we don’t only do that in Austria but in the whole of Europe,” Kohnstamm said. “We’re constructing a pan-European MVNO platform.”

Liberty Global will be able to keep margins high because, as a European cable TV operator, the company runs one billing system, one back-office and one back-haul, which connects the core network to the smaller subnetworks, he said. The company is introducing the MVNO network in the Netherlands, Belgium, Switzerland, Austria and the U.K., Kohnstamm said."
Title: Re: LBTYA - Liberty Global
Post by: sethatk on March 20, 2014, 09:31:12 AM
So Buffett, or one of the T's bought in at an average of $81 and now it is around $42. This gets my attention!
Title: Re: LBTYA - Liberty Global
Post by: racemize on March 20, 2014, 09:33:11 AM
So Buffett, or one of the T's bought in at an average of $81 and now it is around $42. This gets my attention!

There was a split or something of that nature (perhaps a C share dividend).
Title: Re: LBTYA - Liberty Global
Post by: sethatk on March 20, 2014, 09:35:05 AM
Sorry, just noticed the split on 4 March.
Title: Re: LBTYA - Liberty Global
Post by: LowIQinvestor on April 07, 2014, 11:29:32 AM
Any real reason (news) for why the stock is down 6% today?

I am new to Liberty but is it speculation about the Ziggo deal not getting approved? Anyone have thoughts?

Getting interested in buying....
Title: Re: LBTYA - Liberty Global
Post by: Liberty on April 07, 2014, 11:42:19 AM
Any real reason (news) for why the stock is down 6% today?

I am new to Liberty but is it speculation about the Ziggo deal not getting approved? Anyone have thoughts?

Getting interested in buying....

I think it's just the general market. I'm seeing tons of things that are down 3-6% today.
Title: Re: LBTYA - Liberty Global
Post by: saltybit on May 10, 2014, 07:51:26 PM
Liberty Global and Discovery Communications buy All3Media

http://www.theguardian.com/media/2014/may/08/all3media-sold-discovery-liberty-global-deal
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on June 28, 2014, 08:36:58 AM
Does anybody know what this is?

[John Malone] entered into a long-dated post-paid variable forward sale contract with an unaffiliated counterparty relating to a maximum of 1,100,000 shares of Liberty Global Inc.'s Series C common stock, divided into 20 equal components that mature on sequential trading days over the period beginning on August 17, 2017 and ending on September 14, 2017

http://www.sec.gov/Archives/edgar/data/937797/000112760213019833/xslF345X03/form4.xml
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 09, 2014, 03:22:24 AM
Does anybody know what this is?

[John Malone] entered into a long-dated post-paid variable forward sale contract with an unaffiliated counterparty relating to a maximum of 1,100,000 shares of Liberty Global Inc.'s Series C common stock, divided into 20 equal components that mature on sequential trading days over the period beginning on August 17, 2017 and ending on September 14, 2017

http://www.sec.gov/Archives/edgar/data/937797/000112760213019833/xslF345X03/form4.xml

This sounds like a definite sale in 2017 with a variable purchase price component that might reflect the stock price development (or track other measurements) until then.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 14, 2014, 04:13:50 PM
Mike Fries at Sun Valley on Liberty Global's strategy:

http://www.cnbc.com/id/101830388
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 17, 2014, 09:30:01 AM
http://www.reuters.com/article/2014/07/17/us-bskyb-itv-liberty-idUSKBN0FM0JZ20140717
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 30, 2014, 07:37:26 AM
http://online.wsj.com/articles/next-step-for-liberty-global-content-1406667563

Short interview with Malone and Fries in the WSJ.

Gotta love Malone:

Quote
WSJ: What's the status of Liberty's efforts to buy a majority of motor racing series Formula One jointly with Discovery Communications Inc.?

Mr. Malone: We have been engaging in discussions for what seems like an endless period of time. We continue to be interested, but when we have something to announce we'll announce it. You have got to kiss a lot of frogs before you find a prince. At this stage we are still kissing the frogs.

WSJ: Why invest in Formula One?

Mr. Malone: Sports has been elevated as an area of interest in content because of its real-time nature. The industry has a long tradition of paying up for sports and that becomes even more important as other elements of entertainment programming commoditize.

Wonder if I'm the only one who finds it strange to read "Mr. Malone" when he's a doctor..? Oh well, who cares about titles.
Title: Re: LBTYA - Liberty Global
Post by: Yours Truly on July 30, 2014, 08:15:03 AM
http://online.wsj.com/articles/next-step-for-liberty-global-content-1406667563

Short interview with Malone and Fries in the WSJ.

Gotta love Malone:

Quote
WSJ: What's the status of Liberty's efforts to buy a majority of motor racing series Formula One jointly with Discovery Communications Inc.?

Mr. Malone: We have been engaging in discussions for what seems like an endless period of time. We continue to be interested, but when we have something to announce we'll announce it. You have got to kiss a lot of frogs before you find a prince. At this stage we are still kissing the frogs.

WSJ: Why invest in Formula One?

Mr. Malone: Sports has been elevated as an area of interest in content because of its real-time nature. The industry has a long tradition of paying up for sports and that becomes even more important as other elements of entertainment programming commoditize.

Wonder if I'm the only one who finds it strange to read "Mr. Malone" when he's a doctor..? Oh well, who cares about titles.

I would find it odd if all Doctorate holders referred to themselves as Dr. XYZ... I mean we'd have almost all lawyers with a J.D. calling themselves Doctors as well!
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 30, 2014, 08:22:55 AM
I would find it odd if all Doctorate holders referred to themselves as Dr. XYZ... I mean we'd have almost all lawyers with a J.D. calling themselves Doctors as well!

I totally agree. But it still feels weird to call him Mr. Malone for some reason  :-\

Maybe I read somewhere (Cable Cowboys?) that his disciples call him Dr. Malone and that somehow stuck in my subconscious..
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 05, 2014, 02:16:23 PM
Q2 is out:

http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q2-14-FINAL.pdf

Quote
239,000 Organic RGU Additions in Q2 and 584,000 YTD
Rebased OCF Growth of 7% YTD to $4.3 Billion
Adjusted FCF Increased 40% YTD to $1.1 Billion1
Repurchased ~$900 Million of Equity YTD
Title: Re: LBTYA - Liberty Global
Post by: Fat Pitch on August 05, 2014, 07:56:48 PM
Q2 is out:

http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q2-14-FINAL.pdf

Quote
239,000 Organic RGU Additions in Q2 and 584,000 YTD
Rebased OCF Growth of 7% YTD to $4.3 Billion
Adjusted FCF Increased 40% YTD to $1.1 Billion1
Repurchased ~$900 Million of Equity YTD

I haven't dived too deep into the earnings report just yet, but I quickly glanced at it and noticed FCF for the quarter was $711mm and YTD $1 billion. Is $711mm per quarter the run rate now? I'm trying to get an idea what this company is generating right now, but it seems like they are always making acquisitions to nail it down.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 06, 2014, 10:40:25 AM
I haven't dived too deep into the earnings report just yet, but I quickly glanced at it and noticed FCF for the quarter was $711mm and YTD $1 billion. Is $711mm per quarter the run rate now? I'm trying to get an idea what this company is generating right now, but it seems like they are always making acquisitions to nail it down.

Very hard to predict, but the overall trends are quite good IMO. Capital intensity is going down, they're shifting more customers to all digital where ARPUs are higher, and their Horizon platform with even higher ARPUs is growing nicely and has lower churn. Their new investments into content - though still small right now - could be nicely profitable down the line (kind of like how TCI's content investments grew tremendously in value over time and had side benefits on the strategic level). The MVNO projects could also turn into something very valuable, especially if the quad play further reduces churn.

So I'm not answering your questions, but overall I quite like what I see. For a business this well management with cash flows this predictable, I don't think it's expensive. And we're close to where Ted Weschler bought it (or was it Todd).
Title: Re: LBTYA - Liberty Global
Post by: ni-co on August 08, 2014, 10:10:17 AM
Q2 is out:

http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q2-14-FINAL.pdf

Quote
239,000 Organic RGU Additions in Q2 and 584,000 YTD
Rebased OCF Growth of 7% YTD to $4.3 Billion
Adjusted FCF Increased 40% YTD to $1.1 Billion1
Repurchased ~$900 Million of Equity YTD

I haven't dived too deep into the earnings report just yet, but I quickly glanced at it and noticed FCF for the quarter was $711mm and YTD $1 billion. Is $711mm per quarter the run rate now? I'm trying to get an idea what this company is generating right now, but it seems like they are always making acquisitions to nail it down.

If they manage to hold their 40% FCF YOY growth rate for Q3 and Q4, they are going to end 2014 at around $2.5bn in FCF or roughly $3.20 per share. At $41.50 per share the FCF yield would be around 7.7% – with a very good chance to keep growing from there. Taking into account the certainty with which this cash is going to keep rolling in, I don't think this is expensive at all. And they have really ample room to grow their business in Europe alone – organically (think cable broadband for businesses) and through acquisitions (think roll-up). At the moment, this is really one of my favorite stocks.
Title: Re: LBTYA - Liberty Global
Post by: Wilson-TPC on August 08, 2014, 03:05:07 PM
Be mindful of the nearly 40 bil in debt... EV is double that of the market cap.
Title: Re: LBTYA - Liberty Global
Post by: ni-co 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.
Title: Re: LBTYA - Liberty Global
Post by: Wilson-TPC on August 08, 2014, 05:04:39 PM
Yeah but FCF yield is a better measure using EV rather than market cap.
Title: Re: LBTYA - Liberty Global
Post by: dwy000 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.
Title: Re: LBTYA - Liberty Global
Post by: Liberty 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.
Title: Re: LBTYA - Liberty Global
Post by: Wilson-TPC on August 08, 2014, 08:38:46 PM
True that makes sense. My mistake.
Title: Re: LBTYA - Liberty Global
Post by: ni-co 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."
Title: Re: LBTYA - Liberty Global
Post by: ni-co 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 (http://youtu.be/QUbQRwKXeCU?t=3m) 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.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 26, 2014, 07:22:28 AM
LBTYA close to getting approval to buy Ziggo, apparently:

http://www.bloomberg.com/news/2014-08-26/liberty-global-said-set-to-win-eu-approval-for-ziggo-bid.html
Title: Re: LBTYA - Liberty Global
Post by: merkhet 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 Liberty’s strategic value as the primary alternative to the incumbent telecom operator’s 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 Global’s 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.
Title: Re: LBTYA - Liberty Global
Post by: merkhet 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.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on August 27, 2014, 12:13:19 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 Liberty’s strategic value as the primary alternative to the incumbent telecom operator’s 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 Global’s 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.

Thanks, very interesting! Somehow I overlooked this at the time. This is also why I think T&T are loading up on it. LBTYA is a compounding machine.

Here in Germany, LBTYA's largest market, people are only beginning to realize that they can get faster internet connectivity and pay less money by connecting through their cable provider (whom they already pay to watch TV!).

I did some scuttlebutt research regarding the g.fast technology. Recently switching from VDSL to cable, I interviewed the technician about the future capacity of cable lines vs. telco copper lines and their technical issues. He told me that even at today's internet usage, companies in larger buildings have trouble with their connectivity and speeds through traditional copper lines because of the capacity restraints of copper wires and interference issues. This is driving all kinds of companies to switch to cable – he told me that they hardly have enough personal capacity (technicians) to keep up with the demand.

I asked him for the technical reasons of those issues and he told me that copper wires essentially have the characteristics of huge antennas running through the building catching all kinds of signals they're not supposed to and thereby suffering from interference issues, which then impede speed and stability of your internet connection. This was no problem when those wires were only used to transport analogue voice signals but with digital signals with increasing capacity it seems to be an growing problem. At the same time, cable connections not only have much greater capacity but are build from the ground up to minimize those interference issues.

So, even if telcos succeeded with their efforts to bring their copper wires up to 1Gbit or more their connections would be less stable and lower capacity with regard to the whole buildings. He also told me that the techniques telcos use to speed up their connections only work or make sense in densely populated areas, because they only work over very short distances. Yet, at least in Germany, population is split up pretty evenly between cities and more rural areas.

To sum it up, he essentially confirmed what Malone has been saying for a few years now: By sheer dumb luck cable is technically vastly superior in terms of internet connectivity and will be the connection option for homes and companies for several years. Telcos will have to invest substantially only to keep up with cable companies. This is a huge advantage, essentially guaranteeing years of healthy profit growth for cable companies.
Title: Re: LBTYA - Liberty Global
Post by: jouni1 on August 27, 2014, 08:54:02 AM
are there any other differences between share classes than the number of votes?

the reason i haven't been investing in malone's companies is that spinoffs etc get taxed like ordinary dividends up here. our government hates financial engineering and efficiency.

do you guys think the stock dividend model was a one-off event or are they going to keep on doing it? the last one was in 2005 right? if they do it every ~10 years i don't mind.

TIA if anybody has any views on this! i love the cable business. have to start digging into the subsidiaries.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on August 27, 2014, 10:43:16 AM
are there any other differences between share classes than the number of votes?

the reason i haven't been investing in malone's companies is that spinoffs etc get taxed like ordinary dividends up here. our government hates financial engineering and efficiency.

do you guys think the stock dividend model was a one-off event or are they going to keep on doing it? the last one was in 2005 right? if they do it every ~10 years i don't mind.

TIA if anybody has any views on this! i love the cable business. have to start digging into the subsidiaries.

I don't know your system, but in Germany this was taxable, too. However, if you sold your complete shares immediately after the dividend (classes C and A) and immediately re-bought it, this was essentially a non-event from a tax perspective because you could book a loss on your A shares against the gain on your C share dividend. That's what I did and used the opportunity to change my C shares back to A shares (because I like to have at least some votes).
Title: Re: LBTYA - Liberty Global
Post by: jouni1 on August 27, 2014, 08:35:33 PM
i would have to pay capital gains(if there were any ;D) tax on the A shares and dividend tax on the C shares. so it doesn't really work for me. i'm assuming the capital gain would be more than the dividend here. also looking at what he's doing with his american companies, i feel like he might do some weird spin-offs, share issues or whatever that would trigger extra taxes too.

the only way i can get my taxation to a reasonable level is to hold the stocks for 10 years. if there's a lot of spin-offs etc during this time, i'll get hit hard.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on August 28, 2014, 01:49:58 AM
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.

Looks like it's going forward: http://www.sec.gov/Archives/edgar/data/1570585/000157058514000176/0001570585-14-000176-index.htm

Has anybody experience with options and spin-offs? I happen to own Jan'16 call options. Will I get separate calls on the spun-off company after the spin-off will have been consummated?
Title: Re: LBTYA - Liberty Global
Post by: wbr on August 28, 2014, 03:06:52 AM
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.

Looks like it's going forward: http://www.sec.gov/Archives/edgar/data/1570585/000157058514000176/0001570585-14-000176-index.htm

Has anybody experience with options and spin-offs? I happen to own Jan'16 call options. Will I get separate calls on the spun-off company after the spin-off will have been consummated?

I think you keep your calls but the underlying will then be something like 100 shares of parent + 25 shares of spinoff per contract.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on August 28, 2014, 07:18:08 AM
The OCC will make adjustments to it.  It is possible that the OCC will make adjustments that are not favorable to a particular side of the options contract (in rare situations).

If the spinoff is really, really small like MCF/CORE then the options contract may not be adjusted at all.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on August 28, 2014, 07:33:11 AM
Thanks, guys. So, essentially I have to wait until the OCC comes out and says what adjustments are going to be made.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on September 02, 2014, 07:59:41 AM
Rumors of an ITV takeover by Liberty Global:

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/media/11064518/Liberty-Global-positions-for-ITV-takeover.html

Quote
LIBERTY GLOBAL, the owner of Virgin Media, controlled by the American billionaire John Malone, is canvassing support from major ITV shareholders following its acquisition this summer of a 6.4pc stake, raising speculation of a full takeover bid.

The company is said to be aiming to strengthen its position for potential talks with the ITV board by forming alliances with the big American investors that own chunks of Britain’s biggest commercial broadcaster.

Large investors in ITV include Fidelity, which has a nearly 8pc stake, BlackRock, with 4.9pc, and the Californian fund manager Brandes, which has 4.8pc.

City sources said Liberty, which bought its stake from BSkyB in July for £481m, is likely to be aiming for support for a potential bid at a price that would not put too large a premium on ITV shares. They are trading at 210p, their highest since the dotcom crash, valuing the company at more than £8.4bn. Five years ago ITV shares were under 50 pence.

http://www.ft.com/intl/cms/s/0/4c51bc96-31f7-11e4-a19b-00144feabdc0.html#axzz3CAesKj7t

Quote
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/4c51bc96-31f7-11e4-a19b-00144feabdc0.html#ixzz3CAfEFs46

Another revival of takeover speculation pushed ITV to a record high on Monday.
The shares rose 3.6 per cent to 218.7p on reports that Liberty Global, its 6.4 per cent shareholder, has been sounding out ITV shareholders about its options.

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/4c51bc96-31f7-11e4-a19b-00144feabdc0.html#ixzz3CAfM4xxa

When it bought the stake in July, Liberty ruled out bidding for ITV for six months. However, analysts believe Liberty will move sooner to head off the threat of a bid battle.

“We believe the next logical step would be for Liberty to secure a blocking stake of circa 20 per cent which would allow it to determine the future of ITV,” said Merrill Lynch. Merger tax benefits alone could be worth 50p per ITV share to Liberty, with cost savings and synergies valued at a further 55p per share, it said.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on September 02, 2014, 02:12:32 PM
I wonder what's really in this deal for LBTYA. I don't understand it at all.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on September 09, 2014, 06:52:32 AM
http://www.hollywoodreporter.com/news/liberty-global-has-no-current-731387?utm_source=twitter

"no plans" to increase stake in ITV, "no comments" on possible Formula 1 investment with Discovery.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on September 11, 2014, 06:36:06 AM
http://www.bloomberg.com/news/2014-09-11/vodafone-ceo-says-liberty-could-be-good-fit-for-right-price-.html

Quote
Vodafone Group Plc (VOD) Chief Executive Officer Vittorio Colao, asked today whether John Malone’s Liberty Global Plc (LBTYA) might be a good fit for the mobile-phone company, said he would consider it “for the right price.”

Plus a nice little wifi partnership with Comcast:

https://secure.marketwatch.com/story/comcast-and-liberty-global-announce-agreement-to-connect-us-and-european-wi-fi-networks-2014-09-11
Title: Re: LBTYA - Liberty Global
Post by: Liberty on September 11, 2014, 09:27:47 AM
Kind of hoping the Vodafone CEO comment doesn't amount to anything, at least for a long time. I want to keep Liberty Global as a long-term compounder  :P
Title: Re: LBTYA - Liberty Global
Post by: merkhet on September 11, 2014, 09:41:18 AM
Malone has made it pretty clear that he doesn't want to sell the company... (Unless it's for a ridiculous price like with AT&T)
Title: Re: LBTYA - Liberty Global
Post by: ni-co on September 11, 2014, 09:57:00 AM
Malone has made it pretty clear that he doesn't want to sell the company... (Unless it's for a ridiculous price like with AT&T)

Yes. I think you can trust Malone with this. That's the great thing about having a great capital allocator in control of your company.
Title: Re: LBTYA - Liberty Global
Post by: wbr on September 11, 2014, 10:09:48 AM
Malone has made it pretty clear that he doesn't want to sell the company... (Unless it's for a ridiculous price like with AT&T)

The potential take-out premium would need to compensate long term shareholders for the "lost" compounding power. If we assume conservatively that the current FCF multiple will also be the exit multiple in 10 years and that the company will compound FCF/share at 15% per annum then VOD would need to pay the exit price of $176 ($43.67 * 1.15^10) discounted back to today with the long term market return (8%) which would imply a take-out price of $81 or a premium of 87%.

It's just a rough estimate, but that's how I would think about it. I need to deploy the cash from a potential sale in another asset and good coumpounders aren't easy to find so using the market return seems appropriate. Ofc 15% compounding might turn out to be conservative. Also I dont think the FCF multiple is fair right now but rather cheap, considering the compounding potential. And a market return of 8% is optimistic given the current valuation levels. Adjusting these factors would push the price even higher.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on October 10, 2014, 06:34:26 AM
http://www.libertyglobal.com/pdf/press-release/10-10-Ziggo-Regulatory-Clearance-FINAL.pdf

Quote
Liberty Global plc (“Liberty Global”) (NASDAQ: LBTYA, LBTYB and LBTYK) and Ziggo N.V. (“Ziggo”) today announce that Liberty Global has obtained regulatory clearance from the European Commission for the previously announced recommended public offer (the “Offer”) to all holders of issued and outstanding ordinary shares (the “Shares”) in the capital of Ziggo as more fully described in the joint press releases of Liberty Global and Ziggo of January 27, 2014 and June 27, 2014. As a result, the condition on competition clearance for completion of the Offer, as detailed in the Offer Memorandum dated June 27, 2014 (the “Offer Memorandum”) and the U.S. prospectus/offer to exchange (the “U.S. Prospectus”) dated August 19, 2014, has now been satisfied. Ziggo shareholders who wish to tender their Shares into the Offer are reminded that the acceptance period for the Offer (the “Offer Period”) expires at 17:40 hours CET (10:40 hours EST) on November 4, 2014 (the “Acceptance Closing Date”).
Title: Re: LBTYA - Liberty Global
Post by: Liberty on October 22, 2014, 04:38:42 PM
http://www.libertyglobal.com/pdf/press-release/10-22-Announcement-Tracking-Stock-LiLAC-Group-FINAL.pdf

If you didn't think Malone was creating enough tracking stocks and spinoffs these days, here's a new one.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on October 23, 2014, 03:16:24 AM
http://www.libertyglobal.com/pdf/press-release/10-22-Announcement-Tracking-Stock-LiLAC-Group-FINAL.pdf

If you didn't think Malone was creating enough tracking stocks and spinoffs these days, here's a new one.

To quote Warren Buffet: "He likes to move stuff around."
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 05, 2014, 03:34:52 PM
http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-14-FINAL.pdf


Quote
Record Q3 Subscriber Growth of 344,000, 928,000 YTD
Rebased OCF Growth of 5% in Q3 and 6% YTD
YTD Adjusted Free Cash Flow of $1.4 Billion, Up 45%
Completed Tender Offer for Ziggo
Title: Re: LBTYA - Liberty Global
Post by: ni-co on November 06, 2014, 05:38:54 AM
http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-14-FINAL.pdf


Quote
Record Q3 Subscriber Growth of 344,000, 928,000 YTD
Rebased OCF Growth of 5% in Q3 and 6% YTD
YTD Adjusted Free Cash Flow of $1.4 Billion, Up 45%
Completed Tender Offer for Ziggo

Right on track to $2.5bn Adj. FCF for 2014.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 06, 2014, 06:25:26 AM
Right on track to $2.5bn Adj. FCF for 2014.

They're guiding 2.0bn adj. FCF in 2014. Did you mean 2015?

http://www.libertyglobal.com/pdf/presentations/Liberty-Global-Q3-2014-Investor-Call-Presentation-FINAL.pdf

Page 13.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on November 06, 2014, 07:20:29 AM
Right on track to $2.5bn Adj. FCF for 2014.

They're guiding 2.0bn adj. FCF in 2014. Did you mean 2015?

http://www.libertyglobal.com/pdf/presentations/Liberty-Global-Q3-2014-Investor-Call-Presentation-FINAL.pdf

Page 13.

I know. Yet, the Virgin Media acquisition has been FCF accretive +40% every quarter (YOY) for 2014 so far. Maybe, I'm overlooking something. Some special event in Q4 2013? Mind you that FCF was $807m in Q4 2013. If they continue to achieve 40% YOY growth in FCF, 2014 should come in at ~$2.5bn.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on November 11, 2014, 12:19:51 AM
Very nice profile on Malone and his tax avoidance strategies:

Quote
Guided by advisers at Shearman & Sterling LLP, Liberty Global took those new regulations and put them to work for a purpose the government never imagined. Liberty Global devised a transaction that would indeed generate income -- but credited those profits to a newly created U.K. unit, not subject to U.S. tax. Because the income satisfied the U.S. government’s test, investors weren’t subject to any capital-gains tax. And since the U.K. has different tax rules, that particular income didn’t generate any U.K. tax bill either.​

The result was that Malone and his fellow shareholders didn’t have to pay the tax bill that inversion would normally generate.

“Malone threw a multi-billion dollar left hook at the Treasury Department,” said Samuel C. Thompson, a law professor at Pennsylvania State University. “They didn’t see it coming.”

http://www.bloomberg.com/news/2014-11-03/malone-gained-double-tax-break-in-liberty-address-shift.html

As a shareholder of LBTYA you got to love this. I'm just wondering why Malone seems to be one of only a few people who really think about the tax implications while doing their ROI calculations.
Title: Re: LBTYA - Liberty Global
Post by: merkhet on November 17, 2014, 07:12:42 PM
So I did a quick perusal of LiLAC (VTR + Cablevision Puerto Rico), and it looks like the numbers break down roughly as follows:

Revenue: ~ $1.2 billion
EBITDA: ~ $480 million
Debt: ~ $2.1 billion

Roughly 1/4 of that EBITDA will come from Cablevision Puerto Rico, which is only 60% owned by Liberty Global, so you figure the "economic" interest that shareholders have is about 90% of what's there.

Liberty Global trades at almost 10x EBITDA.

Figure LiLAC spins off at somewhere between 7x and 10x EBITDA itself, and that puts the "economic" equity value of LiLAC at somewhere between $1.134 billion and $2.43 billion, and this is coming off a company that currently trades at $36 billion in market cap.

Furthermore, there's a currency issue that causes the Chilean VTR's revenue comps to look pretty terrible and mask organic growth.

Put it all together, and it looks like you have something primed to sell off.
Title: Re: LBTYA - Liberty Global
Post by: Wilson-TPC on November 17, 2014, 07:13:45 PM
I have 8.9x for EV/EBITDA.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on November 17, 2014, 11:19:25 PM
So I did a quick perusal of LiLAC (VTR + Cablevision Puerto Rico), and it looks like the numbers break down roughly as follows:

Revenue: ~ $1.2 billion
EBITDA: ~ $480 million
Debt: ~ $2.1 billion

Roughly 1/4 of that EBITDA will come from Cablevision Puerto Rico, which is only 60% owned by Liberty Global, so you figure the "economic" interest that shareholders have is about 90% of what's there.

Liberty Global trades at almost 10x EBITDA.

Figure LiLAC spins off at somewhere between 7x and 10x EBITDA itself, and that puts the "economic" equity value of LiLAC at somewhere between $1.134 billion and $2.43 billion, and this is coming off a company that currently trades at $36 billion in market cap.

Furthermore, there's a currency issue that causes the Chilean VTR's revenue comps to look pretty terrible and mask organic growth.

Put it all together, and it looks like you have something primed to sell off.

What's going on with VTR's wireless operations?  Perhaps there is something funky there that investors won't get???
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on November 17, 2014, 11:54:50 PM
So skimming through the DEF 14A filing:

It talks about Chilean mobile services:
the migration of Chilean mobile services to a full mobile virtual network operation;

It talks about OneLink:
 These revisions included adjustments [...] to the OneLink Acquisition plan for Puerto Rico
http://en.wikipedia.org/wiki/OneLink_Communications

The acquisition should have closed around the fourth quarter of 2012.  http://www.businesswire.com/news/home/20120626006729/en/Liberty-Global-Searchlight-Acquire-OneLink#.VGr7Esl5V0Y
Title: Re: LBTYA - Liberty Global
Post by: loganc on November 18, 2014, 04:59:48 PM
Does anyone have a take on why they aren't doing a full spin of VTR et al. versus doing the tracker?  I think it was a question on the last call but Fries answered a different question.  In other words, I understand the reasoning behind separating the assets, but not exactly why a tracker is the best option here.

Regardless, I think Global looks pretty attractive here and I noticed that Lou Simpson initiated a position in Q3.   
Title: Re: LBTYA - Liberty Global
Post by: ni-co on November 20, 2014, 06:38:12 AM
Does anyone have a take on why they aren't doing a full spin of VTR et al. versus doing the tracker?  I think it was a question on the last call but Fries answered a different question.  In other words, I understand the reasoning behind separating the assets, but not exactly why a tracker is the best option here.

Regardless, I think Global looks pretty attractive here and I noticed that Lou Simpson initiated a position in Q3.

This is the Malone method™

If you have two businesses and one is a growth business with large capital needs (Latin America) and the other business is more of a mature business throwing off cash (Europe), it's very tax efficient (and much cheaper to finance) when you combine those businesses and they share one balance sheet. You reinvest your European cash flows directly into the Latin American entities and therefore don't pay taxes (or significantly less taxes) on them. This way your cash is worth say 30% more (your tax and interest savings) and the whole entity consisting of the two assets compounds very nicely.

When the growing business matures itself you can spin it off completely, thereby separating the balance sheets.

Malone talks about it at length in this lecture: https://www.youtube.com/watch?v=v5QfCLeloEg
Title: Re: LBTYA - Liberty Global
Post by: loganc on November 20, 2014, 07:31:45 AM
Does anyone have a take on why they aren't doing a full spin of VTR et al. versus doing the tracker?  I think it was a question on the last call but Fries answered a different question.  In other words, I understand the reasoning behind separating the assets, but not exactly why a tracker is the best option here.

Regardless, I think Global looks pretty attractive here and I noticed that Lou Simpson initiated a position in Q3.

This is the Malone method™

If you have two businesses and one is a growth business with large capital needs (Latin America) and the other business is more of a mature business throwing off cash (Europe), it's very tax efficient (and much cheaper to finance) when you combine those businesses and they share one balance sheet. You reinvest your European cash flows directly into the Latin American entities and therefore don't pay taxes (or significantly less taxes) on them. This way your cash is worth say 30% more (your tax and interest savings) and the whole entity consisting of the two assets compounds very nicely.

When the growing business matures itself you can spin it off completely, thereby separating the balance sheets.

Malone talks about it at length in this lecture: https://www.youtube.com/watch?v=v5QfCLeloEg

I understand all of that and it is obviously great.  But, is that what is really happening in this particular case?  Is VTR not self funding?  It appears so in this case based on the recent results. 
Title: Re: LBTYA - Liberty Global
Post by: wellmont on November 20, 2014, 08:27:21 AM
there's not a lot of difference in trackers and hard spin. I think he goes hard spin when he is sure about the strategic direction, and is closer to taking action. I think he uses trackers to signal to the markets that there is a valuation gap here and that changes may be in store to close the gap. trackers are not as final. they are still one C corp. and you can move around pieces, changing the mix of assets and liabilities, before you do the hard spin. they can also be reversed.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on November 20, 2014, 11:16:24 AM
With tracking stocks:
1- Tax efficient.
2- Operating synergies.  When they negotiate for content, they can do it as one company.
When they buy set-top boxes (one of the largest capex expenses), they do it as one company.
If My Prime gains traction (it probably won't), they can scale that across the whole company.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on November 20, 2014, 12:16:40 PM
Now, this sounds interesting: http://video.cnbc.com/gallery/?video=3000331576

Here are several parts of the whole interview: http://www.valuewalk.com/2014/11/john-malone-talks-liberty-investor-conference-videos/
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on November 20, 2014, 12:43:07 PM
Now, this sounds interesting: http://video.cnbc.com/gallery/?video=3000331576

Here are several parts of the whole interview: http://www.valuewalk.com/2014/11/john-malone-talks-liberty-investor-conference-videos/

Thanks for posting!
+1
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on November 24, 2014, 08:08:42 AM
Does anyone have a take on why they aren't doing a full spin of VTR et al. versus doing the tracker?  I think it was a question on the last call but Fries answered a different question.  In other words, I understand the reasoning behind separating the assets, but not exactly why a tracker is the best option here.

Regardless, I think Global looks pretty attractive here and I noticed that Lou Simpson initiated a position in Q3.

This is the Malone method™

If you have two businesses and one is a growth business with large capital needs (Latin America) and the other business is more of a mature business throwing off cash (Europe), it's very tax efficient (and much cheaper to finance) when you combine those businesses and they share one balance sheet. You reinvest your European cash flows directly into the Latin American entities and therefore don't pay taxes (or significantly less taxes) on them. This way your cash is worth say 30% more (your tax and interest savings) and the whole entity consisting of the two assets compounds very nicely.

When the growing business matures itself you can spin it off completely, thereby separating the balance sheets.

Malone talks about it at length in this lecture: https://www.youtube.com/watch?v=v5QfCLeloEg

I understand all of that and it is obviously great.  But, is that what is really happening in this particular case?  Is VTR not self funding?  It appears so in this case based on the recent results.

This is just conjecture on my part, but reading the last quarter transcript I feel they are creating a tracking stock instead of a hard spin off, in order to create a "currency" for acquisitions and consolidation in Latam. I think we are going to see a lot of transactions in Latam going forward. The characteristics of this tracker spin off seem very very interesting when viewed from that perspective. The part of the transcript I am referring to is as follows

Quote
We also announced the creation of a tracking stock for our Latin American Caribbean asset that we have been talking about for a while. This will require shareholder approval and a bit of time to officially implement. But we continue to believe that this is the best way to create value for shareholders, by highlighting our fast growing operations in Chile and Puerto Rico, and positioning us to explore new opportunities in the region with massive broadband upside.

The tracker allows them to leverage their european balance sheet to borrow money for acquisitions in Latam, while also allowing them to buy those assets without giving up portions of european equity.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 24, 2014, 08:59:21 AM
LILA is definitely interesting.

If Liberty Global in Europe is TCI 2.0, will LILA be TCI 3.0, will they try to rerun the playbook in the region?
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on November 24, 2014, 11:36:58 AM
This is just conjecture on my part, but reading the last quarter transcript I feel they are creating a tracking stock instead of a hard spin off, in order to create a "currency" for acquisitions and consolidation in Latam.

Both spinoff and tracking stock can be used as currency.  If LILA was spun out, its shares could potentially fetch a higher valuation than a tracking stock.  Tracking stocks make things complicated and that may depress the share price.
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on November 24, 2014, 11:59:41 AM
This is just conjecture on my part, but reading the last quarter transcript I feel they are creating a tracking stock instead of a hard spin off, in order to create a "currency" for acquisitions and consolidation in Latam.

Both spinoff and tracking stock can be used as currency.  If LILA was spun out, its shares could potentially fetch a higher valuation than a tracking stock.  Tracking stocks make things complicated and that may depress the share price.

You probably are correct, but the advantage of a tracker is the tracker gets to use the balance sheet of the parent and associated debt capacity. By itself, it probably wouldn't be able to fund some large scale acquisitions should those opportunities appear. If it gets to use the LBTY debt capacity, LILA carries a larger checkbook.

This gives them many options. buy with stock if tracker is expensive or buy with debt if debt is cheap and tracker is undervalued. That optionality is in all likelihood more valuable than the one time value gain in a hard spinoff.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 28, 2014, 10:05:39 AM
According to Bloomberg, Vodafone is looking at Liberty Global. Hence the spike right before the close.

https://twitter.com/bloombergtv/status/538390684857032704

Edit: Here's the piece:

http://www.bloomberg.com/news/2014-11-28/vodafone-said-to-eye-takeover-of-malone-s-liberty-global.html

More details here (via TXlaw) (nov 25):

http://www.broadbandtvnews.com/2014/11/25/liberty-global-looks-at-german-cable-deal-with-vodafone/

Quote
Liberty Global has effectively encouraged Vodafone to consider taking over its German cable business, arguing that the competition watchdogs would probably not oppose such a deal which would enable Vodafone to create a nationwide German cable giant through the merger of its subsidiary Kabel Deutschland with Liberty Global’s Unitymedia Kabel BW.

Earlier piece (nov 21):

http://www.bloomberg.com/news/2014-11-21/liberty-global-sees-german-watchdog-open-to-vodafone-deal.html
Title: Re: LBTYA - Liberty Global
Post by: ni-co on November 28, 2014, 11:45:08 AM
According to Bloomberg, Vodafone is looking at Liberty Global. Hence the spike right before the close.

https://twitter.com/bloombergtv/status/538390684857032704

Edit: Here's the piece:

http://www.bloomberg.com/news/2014-11-28/vodafone-said-to-eye-takeover-of-malone-s-liberty-global.html

More details here (via TXlaw) (nov 25):

http://www.broadbandtvnews.com/2014/11/25/liberty-global-looks-at-german-cable-deal-with-vodafone/

Quote
Liberty Global has effectively encouraged Vodafone to consider taking over its German cable business, arguing that the competition watchdogs would probably not oppose such a deal which would enable Vodafone to create a nationwide German cable giant through the merger of its subsidiary Kabel Deutschland with Liberty Global’s Unitymedia Kabel BW.

Earlier piece (nov 21):

http://www.bloomberg.com/news/2014-11-21/liberty-global-sees-german-watchdog-open-to-vodafone-deal.html

This comes really as quite a surprise to me. Not because it wouldn't make sense but because they think Malone would approve it. Maybe he sent a signal to them that he would be willing to consider it. Yet, hearing him talk about LBTYA I didn't get the impression that he was willing to sell.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 28, 2014, 11:50:35 AM
This comes really as quite a surprise to me. Not because it wouldn't make sense but because they think Malone would approve it. Maybe he sent a signal to them that he would be willing to consider it. Yet, hearing him talk about LBTYA I didn't get the impression that he was willing to sell.

That's my impression too. I've been having a discussion about this on Twitter with a few people, and basically, I can't see a way that would make much sense for this to happen. Malone hates taxes, and he hates not having control (he learned this the hard way). He wouldn't take VOD stock for the whole thing, and he wouldn't want cash (tax hit). And if the premium is high enough to entice Malone, then the deal is probably bad for VOD, so Malone would want to stay away from VOD stock even more...

Maybe they'd sell some assets (there's speculation about the German sub) for a really high price and redeploy into some other bargain (but there aren't many things left in Europe with the right scale and growth environment; maybe somehow in LatAm? But they could do that just with cheap debt, no need to sell a crown jewel), but that's also a weird move; everything they've been doing has been to build scale, and Germany is one of their biggest and best-performing markets... Losing scale and their best asset would require a really crazy high premium to compensate.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on November 28, 2014, 02:04:15 PM
They sold Jcom a while back.  I don't think scale is that important.  Though Jcom is Japanese, so the CPE technology is different because Japan has its own analog TV standards.  Their programming needs are unique because Japanese culture is weird.

I think there's a lot of turnaround opportunities at Virgin/UK that Malone likes.  Selling only the German assets might make sense.  He might also see if he can swap the German cable assets for something else.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 28, 2014, 02:09:05 PM
He might also see if he can swap the German cable assets for something else.

That's exactly what I just thought, came here to write that. This would certainly be tax efficient and in keeping with Malone's MO.
Title: Re: LBTYA - Liberty Global
Post by: loganc on November 28, 2014, 05:13:14 PM
He might also see if he can swap the German cable assets for something else.

That's exactly what I just thought, came here to write that. This would certainly be tax efficient and in keeping with Malone's MO.

There is a lot of potential with LBTYA German assets with respect to broadband penetration.  That being said, some sort of asset swap makes more sense to me than an outright sale of the company.  What premium would Malone take?  Would he even agree to a deal for a 100% premium?  I wouldn't..
Title: Re: LBTYA - Liberty Global
Post by: merkhet on November 28, 2014, 06:14:31 PM
I would be flabbergasted if he sold Liberty Global. Their runway is so long.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on November 28, 2014, 09:47:32 PM
He might also see if he can swap the German cable assets for something else.

That's exactly what I just thought, came here to write that. This would certainly be tax efficient and in keeping with Malone's MO.

There is a lot of potential with LBTYA German assets with respect to broadband penetration.  That being said, some sort of asset swap makes more sense to me than an outright sale of the company.  What premium would Malone take?  Would he even agree to a deal for a 100% premium?  I wouldn't..

Yes. I wouldn't rule it out but this doesn't seem probable either. Those assets are almost certainly too valuable compared to the price Vodafone would be willing to pay. The only thing I can see is some kind of joint venture. Then again, there is the control issue. And it would deprive him of some flexibility. I'm really curious about what made Vodafone think that they could be able to get these assets from Malone at a price they'd be willing to pay and how and why their contemplations got into the news.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 01, 2014, 12:13:34 PM
http://dealbook.nytimes.com/2014/12/01/how-a-vodafone-deal-for-liberty-global-could-work/?smid=tw-dealbook&seid=auto

Kind of what we've been saying. Doesn't make too much sense, at least not a takeover of the whole thing.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 03, 2014, 11:05:02 AM
Vodafone downplaying the possibility of a deal:

http://www.reuters.com/article/2014/12/03/libertyglobal-ma-vodafone-idUSL6N0TN4A420141203

Quote
Vodafone has met with analysts and investors this week to calm fears it could make a multi-billion dollar takeover bid for Europe's biggest cable company Liberty Global, according to people present.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on December 03, 2014, 11:40:26 AM
I'd like to see Vodafone and other M&A hype die down so maybe LBTYA shares drop back down to $40.  Would love to buy more.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 03, 2014, 11:43:25 AM
I'd like to see Vodafone and other M&A hype die down so maybe LBTYA shares drop back down to $40.  Would love to buy more.

I might buy more too if it dropped enough, but even if I don't, I'd like to see it come down so the buybacks are more effective. I hope Vodafone didn't make the price pop for no reason...
Title: Re: LBTYA - Liberty Global
Post by: ni-co on December 05, 2014, 01:18:00 PM
So, this is what those rumors seem to be about:
Quote
Antitrust pressure could push Liberty out of Germany

Pressure from competition regulators could prompt Liberty Global to abandon Germany if it can no longer pursue its growth ambitions in Europe's biggest cable market, sources have told Reuters…

http://www.reuters.com/article/2014/12/05/liberty-global-germany-idUSL6N0TL39I20141205 
Title: Re: LBTYA - Liberty Global
Post by: rukawa on December 06, 2014, 11:18:48 PM
I took a quick look at Liberty Global and its EV/EBIT is like 30. What am I missing here? Seems overpriced to me. On EBITDA measures its a lot cheaper but that ignores depreciation. And depreciation is a real cost which is particularly important for telecom.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on December 07, 2014, 04:17:19 AM
First off, depreciation is not a real cost, capex is. Capex should roughly equal depreciation in the long run but it doesn't when you did large one-off expenditures that only need to be made once (like building a cable network by digging up the streets for example – you only do this once if there is no need to upgrade the hardware). Then, this is not a telecom company, it's a cable company. There is a huge difference exactly because of capex requirements, especially when it comes to maintenance capex – which is hard to guess, though (whereby with "maintenance" I mean "maintain your existing network competitive").

That said, LBTYA is not cheap but you may have to wait for quite some time to get it when it's cheap.
Title: Re: LBTYA - Liberty Global
Post by: loganc on December 08, 2014, 11:50:25 PM
First off, depreciation is not a real cost, capex is. Capex should roughly equal depreciation in the long run but it doesn't when you did large one-off expenditures that only need to be made once (like building a cable network by digging up the streets for example – you only do this once if there is no need to upgrade the hardware). Then, this is not a telecom company, it's a cable company. There is a huge difference exactly because of capex requirements, especially when it comes to maintenance capex – which is hard to guess, though (whereby with "maintenance" I mean "maintain your existing network competitive").

That said, LBTYA is not cheap but you may have to wait for quite some time to get it when it's cheap.

My view is that Global is far cheaper than it appears on superficial metrics.  You nail it in talking about "maintenance capex" needs for this business.  I think that it is much lower than what is going on presently and the trajectory is that capex is decreasing.  Global is just a monster of a business - my regret is not realizing this like 5 years ago.   
Title: Re: LBTYA - Liberty Global
Post by: ni-co on December 09, 2014, 03:01:13 AM
First off, depreciation is not a real cost, capex is. Capex should roughly equal depreciation in the long run but it doesn't when you did large one-off expenditures that only need to be made once (like building a cable network by digging up the streets for example – you only do this once if there is no need to upgrade the hardware). Then, this is not a telecom company, it's a cable company. There is a huge difference exactly because of capex requirements, especially when it comes to maintenance capex – which is hard to guess, though (whereby with "maintenance" I mean "maintain your existing network competitive").

That said, LBTYA is not cheap but you may have to wait for quite some time to get it when it's cheap.

My view is that Global is far cheaper than it appears on superficial metrics.  You nail it in talking about "maintenance capex" needs for this business.  I think that it is much lower than what is going on presently and the trajectory is that capex is decreasing.  Global is just a monster of a business - my regret is not realizing this like 5 years ago.   

Same here. I've realized this two years ago but only after Malone kept hammering on it in several interviews. I don't think it's too late, though. Malone keeps pointing to a worldwide roll-up and sees LIberty Global at the center of it.
Title: Re: LBTYA - Liberty Global
Post by: mg0516 on December 09, 2014, 07:44:13 AM
Looks expensive on standard metrics.  FCF to Equity multiple is reasonable...factor in the massive pricing power they have and even cheaper.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on December 09, 2014, 11:44:00 AM
Looks expensive on standard metrics.  FCF to Equity multiple is reasonable...factor in the massive pricing power they have and even cheaper.

Revenue growth at many of Liberty's market have been slow.  Their best non-UK market had something like 6% revenue growth YoY.  Going forward, there might not be much pricing power due to open access and due to competition.

I think the value is in turning UK/Virgin around.  There is the potential for huge earnings growth there.  It's the Charter story being played out by a CEO who's not quite as good as Tom Rutledge.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on December 09, 2014, 11:50:55 AM
Looks expensive on standard metrics.  FCF to Equity multiple is reasonable...factor in the massive pricing power they have and even cheaper.

Revenue growth at many of Liberty's market have been slow.  Their best non-UK market had something like 6% revenue growth YoY.  Going forward, there might not be much pricing power due to open access and due to competition.

I think the value is in turning UK/Virgin around.  There is the potential for huge earnings growth there.  It's the Charter story being played out by a CEO who's not quite as good as Tom Rutledge.

Competition by whom? I live in Germany and I just don't see how Deutsche Telekom is going to keep up with broadband speed increases cable cos are dictating here. They can't even do it today. People are still too fixated on TV when it comes to cable cos. Malone came back into cable because of broadband, not because of video. In 2012, he said:

Quote
It looks to me like broadband is even, if it’s possible, more sticky than video.

http://www.multichannel.com/news/content/unleashing-liberty-malone-muses-global-cable-content-us-economy/359967
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on December 09, 2014, 12:08:37 PM
Competition by whom? I live in Germany and I just don't see how Deutsche Telekom is going to keep up with broadband speed increases cable cos are dictating here. They can't even do it today. People are still too fixated on TV when it comes to cable cos. Malone came back into cable because of broadband, not because of video.

Germany is one of Global's fastest growing markets.  They face competition from:
1- DSL.  From what I understand, Germany is open access for DSL.  The phone company must open up its network to competitors.  So that will drive down the cost of DSL.
Cable companies there aren't open access.

2- Cord cutting.  If you lose the video revenue, then you can try to make it up by raising the cost of Internet.  But in Germany, Liberty Global has a pretty competitive marketplace for Internet access because of DSL and open access.

DSL is somewhat close to cable in terms of effective speeds for Netflix.  http://ispspeedindex.netflix.com/germany

---
I haven't figured out how much of the revenue growth in Germany was from market share gains (cable has very little share versus what it "ought" to have) and how much from price increases.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on December 09, 2014, 12:19:26 PM
Competition by whom? I live in Germany and I just don't see how Deutsche Telekom is going to keep up with broadband speed increases cable cos are dictating here. They can't even do it today. People are still too fixated on TV when it comes to cable cos. Malone came back into cable because of broadband, not because of video.

Germany is one of Global's fastest growing markets.  They face competition from:
1- DSL.  From what I understand, Germany is open access for DSL.  The phone company must open up its network to competitors.  So that will drive down the cost of DSL.
Cable companies there aren't open access.

2- Cord cutting.  If you lose the video revenue, then you can try to make it up by raising the cost of Internet.  But in Germany, Liberty Global has a pretty competitive marketplace for Internet access because of DSL and open access.

DSL is somewhat close to cable in terms of effective speeds for Netflix.  http://ispspeedindex.netflix.com/germany

---
I haven't figured out how much of the revenue growth in Germany was from market share gains (cable has very little share versus what it "ought" to have) and how much from price increases.

That's not the way I see it. This is a matter of capacity. It's simple physics. There are three thick cables going into almost every house in Germany. Two copper wires (the telephone line and electricity) and one TV cable. By sheer dumb luck the TV cable is much, much better suited for transporting data than the other two. This gap is poised to grow. The only countermeasure telcos have is digging up the streets and lay fibre cable to every single house in Germany. Can you imagine how expensive this will be? Now with this information you can make a reasonable guess how this is going to develop over the next few years.

Add to this that businesses are only beginning to realize that they will have much better internet connectivity by switching from DSL to cable.

The only significant risk I can see is regulatory risk.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on December 09, 2014, 12:51:58 PM
Competition by whom? I live in Germany and I just don't see how Deutsche Telekom is going to keep up with broadband speed increases cable cos are dictating here. They can't even do it today. People are still too fixated on TV when it comes to cable cos. Malone came back into cable because of broadband, not because of video.

Germany is one of Global's fastest growing markets.  They face competition from:
1- DSL.  From what I understand, Germany is open access for DSL.  The phone company must open up its network to competitors.  So that will drive down the cost of DSL.
Cable companies there aren't open access.

2- Cord cutting.  If you lose the video revenue, then you can try to make it up by raising the cost of Internet.  But in Germany, Liberty Global has a pretty competitive marketplace for Internet access because of DSL and open access.

DSL is somewhat close to cable in terms of effective speeds for Netflix.  http://ispspeedindex.netflix.com/germany

---
I haven't figured out how much of the revenue growth in Germany was from market share gains (cable has very little share versus what it "ought" to have) and how much from price increases.

That's not the way I see it. This is a matter of capacity. It's simple physics. There are three thick cables going into almost every house in Germany. Two copper wires (the telephone line and electricity) and one TV cable. By sheer dumb luck the TV cable is much, much better suited for transporting data than the other two. This gap is poised to grow. The only countermeasure telcos have is digging up the streets and lay fibre cable to every single house in Germany. Can you imagine how expensive this will be? Now with this information you can make a reasonable guess how this is going to develop over the next few years.

Add to this that businesses are only beginning to realize that they will have much better internet connectivity by switching from DSL to cable.

The only significant risk I can see is regulatory risk.

I don't think that consumers really need the higher speeds that cable offers (which cable can deliver at lower cost).

There are some limits that we run into.  In movie theatres, consumers do not care about 2K/HD versus 4K/ultra HD.  In the home, consumers will likely notice ultra HD and care about it.  However, a netflix stream of ultra HD only requires 15 mbps.  So a household might not have much use for speeds faster than 60 mbps.

DSL with vectoring is pretty fast over short-medium distances.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on December 09, 2014, 01:29:48 PM
Competition by whom? I live in Germany and I just don't see how Deutsche Telekom is going to keep up with broadband speed increases cable cos are dictating here. They can't even do it today. People are still too fixated on TV when it comes to cable cos. Malone came back into cable because of broadband, not because of video.

Germany is one of Global's fastest growing markets.  They face competition from:
1- DSL.  From what I understand, Germany is open access for DSL.  The phone company must open up its network to competitors.  So that will drive down the cost of DSL.
Cable companies there aren't open access.

2- Cord cutting.  If you lose the video revenue, then you can try to make it up by raising the cost of Internet.  But in Germany, Liberty Global has a pretty competitive marketplace for Internet access because of DSL and open access.

DSL is somewhat close to cable in terms of effective speeds for Netflix.  http://ispspeedindex.netflix.com/germany

---
I haven't figured out how much of the revenue growth in Germany was from market share gains (cable has very little share versus what it "ought" to have) and how much from price increases.

That's not the way I see it. This is a matter of capacity. It's simple physics. There are three thick cables going into almost every house in Germany. Two copper wires (the telephone line and electricity) and one TV cable. By sheer dumb luck the TV cable is much, much better suited for transporting data than the other two. This gap is poised to grow. The only countermeasure telcos have is digging up the streets and lay fibre cable to every single house in Germany. Can you imagine how expensive this will be? Now with this information you can make a reasonable guess how this is going to develop over the next few years.

Add to this that businesses are only beginning to realize that they will have much better internet connectivity by switching from DSL to cable.

The only significant risk I can see is regulatory risk.

I don't think that consumers really need the higher speeds that cable offers (which cable can deliver at lower cost).

There are some limits that we run into.  In movie theatres, consumers do not care about 2K/HD versus 4K/ultra HD.  In the home, consumers will likely notice ultra HD and care about it.  However, a netflix stream of ultra HD only requires 15 mbps.  So a household might not have much use for speeds faster than 60 mbps.

DSL with vectoring is pretty fast over short-medium distances.

That's what I thought, too. However, what matters in the end is large capacity at high speeds. And the picture for DSL is very dark there. I think we are only at the beginning of people watching TV over the internet – services like Netflix, as paradoxically as it seems – are going to be a boon for cable cos, because of broadband usage. Momentarily, it's only certain age groups watching over-the-top TV, but Netflix is already using up so much capacity (http://www.statista.com/chart/1620/top-10-traffic-hogs/) that I really doubt that prices are going to stay where they are.

Malone is predicting that, in the end, some kind of volume pricing structure will prevail. I think that cable cos are going to gain real pricing power in broadband, this will more than make up for cable cutters. Momentarily, it looks like this is going to be a very smooth transition with the importance of broadband increasing and of TV simultaneously decreasing.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on December 09, 2014, 04:04:15 PM
That's what I thought, too. However, what matters in the end is large capacity at high speeds. And the picture for DSL is very dark there.

Cable has an advantage in speeds at the "last mile" to the consumer's home.  Cable can achieve high speeds at a lower cost.

Capacity-wise, cable and DSL should be on equal footing.  There are some economies of scale to being a big ISP.

Eventually, the cost of delivering Internet TV will rapidly decline.  Once 4K matures, demand for higher capacity won't grow as fast as Moore's Law.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 10, 2014, 06:00:31 AM
http://www.libertyglobal.com/pdf/press-release/12-10-Acquisition-of-Choice-FINAL.pdf

Puerto Rico acquisition.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 11, 2014, 11:59:05 AM
Listened to Mike Fries speak at the UBS conference. He said that he doesn't know where the rumor that they might get out of Germany comes from, but it's their "crown jewel", and it doesn't sound like he sees any reason for that to happen.

If anyone wants the audio:

https://www.dropbox.com/s/vlc03t95cgxf3vf/2014-dec-LBTYA-UBS-conf.m4a?dl=0
Title: Re: LBTYA - Liberty Global
Post by: loganc on December 11, 2014, 01:09:11 PM
Listened to Mike Fries speak at the UBS conference. He said that he doesn't know where the rumor that they might get out of Germany comes from, but it's their "crown jewel", and it doesn't sound like he sees any reason for that to happen.

If anyone wants the audio:

https://www.dropbox.com/s/vlc03t95cgxf3vf/2014-dec-LBTYA-UBS-conf.m4a?dl=0

Thanks so much for posting this.  What software do you use to record these calls? 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 11, 2014, 01:17:53 PM
Listened to Mike Fries speak at the UBS conference. He said that he doesn't know where the rumor that they might get out of Germany comes from, but it's their "crown jewel", and it doesn't sound like he sees any reason for that to happen.

If anyone wants the audio:

https://www.dropbox.com/s/vlc03t95cgxf3vf/2014-dec-LBTYA-UBS-conf.m4a?dl=0

Thanks so much for posting this.  What software do you use to record these calls?

https://www.rogueamoeba.com/audiohijackpro/
Title: Re: LBTYA - Liberty Global
Post by: loganc on December 11, 2014, 01:20:48 PM

Many thanks, sir.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on December 11, 2014, 02:44:44 PM
Listened to Mike Fries speak at the UBS conference. He said that he doesn't know where the rumor that they might get out of Germany comes from, but it's their "crown jewel", and it doesn't sound like he sees any reason for that to happen.

If anyone wants the audio:

https://www.dropbox.com/s/vlc03t95cgxf3vf/2014-dec-LBTYA-UBS-conf.m4a?dl=0

Thanks so much for posting this.  What software do you use to record these calls?

https://www.rogueamoeba.com/audiohijackpro/

Thank you for uploading! Great software, too.
Title: Re: LBTYA - Liberty Global
Post by: dabuff on January 06, 2015, 07:57:53 AM
Is there any reason one would prefer LBTYA over LBTYK or vice versa? I've noted a few guru investors buying one class but not the other..
Title: Re: LBTYA - Liberty Global
Post by: wbr on January 06, 2015, 08:10:26 AM
Is there any reason one would prefer LBTYA over LBTYK or vice versa? I've noted a few guru investors buying one class but not the other..

LBTYK shares are usually cheaper because they have no voting right. By buying these you get a little more of the business for your money.
Title: Re: LBTYA - Liberty Global
Post by: dabuff on January 06, 2015, 08:34:58 AM
Thank you, wbr. So the investor who has no intentions of activism etc. he is better off buying the non-voting shares in the Liberty business (I suppose the same applies for the rest of the Malone enterprises)?
Title: Re: LBTYA - Liberty Global
Post by: sriraja on January 06, 2015, 09:40:09 AM
With most of Malone's companies, there is no way an activist can do anything. He pretty much owns more than 50% of voting rights. So a class A share is pretty much equal to a class C.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on January 06, 2015, 05:00:08 PM
For those interested, here's Mike Fries speaking at the Citi conference. Some good stuff in there:

https://www.dropbox.com/s/ozh7h9sy02vhl2q/2015-jan-LBTYA-citi-conf.m4a?dl=0
Title: Re: LBTYA - Liberty Global
Post by: ni-co on January 07, 2015, 03:30:28 AM
For those interested, here's Mike Fries speaking at the Citi conference. Some good stuff in there:

https://www.dropbox.com/s/ozh7h9sy02vhl2q/2015-jan-LBTYA-citi-conf.m4a?dl=0

Thank you, Liberty!
Title: Re: LBTYA - Liberty Global
Post by: merkhet on January 19, 2015, 12:25:54 PM
Interesting thought by John Malone re LiLAC from 2012.

https://www.youtube.com/watch?v=v5QfCLeloEg&index=1&list=WL

@ 34:00, he talks about Cablevision Puerto Rico, which retransmits content from the U.S. He goes on to say that if Cablevision Puerto Rico gets bought by an American operator, they could immediately cut their content costs by around $50 million because of the scale of the American operator.
Title: Re: LBTYA - Liberty Global
Post by: jay21 on January 19, 2015, 12:32:51 PM
Interesting thought by John Malone re LiLAC from 2012.

https://www.youtube.com/watch?v=v5QfCLeloEg&index=1&list=WL

@ 34:00, he talks about Cablevision Puerto Rico, which retransmits content from the U.S. He goes on to say that if Cablevision Puerto Rico gets bought by an American operator, they could immediately cut their content costs by around $50 million because of the scale of the American operator.

Maybe more a broadband/charter target?
Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 13, 2015, 12:42:00 AM
http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-14-FINAL.pdf


Quote
Record Q3 Subscriber Growth of 344,000, 928,000 YTD
Rebased OCF Growth of 5% in Q3 and 6% YTD
YTD Adjusted Free Cash Flow of $1.4 Billion, Up 45%
Completed Tender Offer for Ziggo

Right on track to $2.5bn Adj. FCF for 2014.

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Earnings-Q4-14-FINAL.pdf

I was too optimistic there. $2.2bn FCF ($2.48 per share) in 2014. $2.5bn is their goal for 2015. They are really aggressive with taking on additional debt – leverage is 4.9x OCF now. Leaving my overoptimism aside, I think the numbers are still great. OCF growth in Germany is 9%! Btw if you want to take a look at a hot candidate for LBTYA's next acquisition target, take a look at Tele Columbus (TC1).
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 13, 2015, 06:04:51 AM
2.2bn FCF is still 25% growth (including Ziggo), so nothing to complain about. Listening to CC now, but so far am very happy with what I see.

Update: Good that they're filling in the easy gaps in the UK, that should be nicely profitable. I like how they're going about it, building it modularly, pre-selling, already doing trials. Seems the most low-risk way to go about it.

Fries: "When this program is done, we'll have bought back nearly 16bn of stock since started company."

Increased current buyback program by 2bn.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on February 17, 2015, 05:14:50 AM
http://dealbook.nytimes.com/2015/02/16/liberty-global-becoming-a-big-fish-risks-attracting-the-eye-of-a-shark/

Nice article on the growing chances of Lbtya being bought out
Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 17, 2015, 05:39:23 AM
http://dealbook.nytimes.com/2015/02/16/liberty-global-becoming-a-big-fish-risks-attracting-the-eye-of-a-shark/

Nice article on the growing chances of Lbtya being bought out

Thanks for the article! I think the chances are actually declining. LBTYA is on pace to becoming the largest broadband provider in the world. Malone's plan is working out very nicely for them. Even today I don't see a company being able to pay Malone what LBTYA is actually worth – and he knows its worth.

This moment last year (http://video.cnbc.com/gallery/?video=3000331576) when he talked about LBTYA being able to buy Comcast someday? – He was dead serious. I think it still bothers him that Brian Roberts ended up with his assets.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on February 17, 2015, 11:47:09 AM
I'm curious what happens with Mike White after ATT completes its DTV acquisition.  I'm not sure if he's staying around, but it would seem like the LiLAC group would be a logical spinoff and land place for him.  Afterall much of the growth in DTV is in Latam, even though everyone sees it as a US company.

Mexico looks like a really tough environment to do cable without partnering up.  Besides Chile, what other South American countries have the scale and consumer income to allow a cable buildout?  Maybe Colombia and Brazil?

Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on February 17, 2015, 12:58:20 PM
I'm curious what happens with Mike White after ATT completes its DTV acquisition.  I'm not sure if he's staying around, but it would seem like the LiLAC group would be a logical spinoff and land place for him.  Afterall much of the growth in DTV is in Latam, even though everyone sees it as a US company.

Mexico looks like a really tough environment to do cable without partnering up.  Besides Chile, what other South American countries have the scale and consumer income to allow a cable buildout?  Maybe Colombia and Brazil?

I'm not sure Mike White likes Liberty.  Liberty wanted to take control of DTV and I think White was against that.  It seemed to me that DTV/White paid Malone to go away.

LiLAC will have assets in Puerto Rico and in Chile.  Not much overlap with DTV in South America.

I think that most of the value creation is in taking poorly managed assets and operating them better.  In Global's portfolio, Virgin was terribly managed and is their biggest opportunity.  I think the European assets will grow earnings more than the Latam assets.  Puerto Rico is mature.  Not sure about Chile but I think it's close to mature.

This moment last year (http://video.cnbc.com/gallery/?video=3000331576) when he talked about LBTYA being able to buy Comcast someday? – He was dead serious. I think it still bothers him that Brian Roberts ended up with his assets.

On some conference call I think Malone said that he was happy with the outcome.

So Charter gets to cherry pick the best assets from Time Warner's footprint.  They're going after rural assets with little competition from high-speed DSL and fibre.
It's tax efficient.
And the two companies swap assets to consolidate their cable assets in certain areas, so that's a win-win situation.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 17, 2015, 01:55:55 PM
This moment last year (http://video.cnbc.com/gallery/?video=3000331576) when he talked about LBTYA being able to buy Comcast someday? – He was dead serious. I think it still bothers him that Brian Roberts ended up with his assets.

On some conference call I think Malone said that he was happy with the outcome.

So Charter gets to cherry pick the best assets from Time Warner's footprint.  They're going after rural assets with little competition from high-speed DSL and fibre.
It's tax efficient.
And the two companies swap assets to consolidate their cable assets in certain areas, so that's a win-win situation.

Sorry. This was a misunderstanding. I meant the AT&T TCI deal which was a disaster for Malone in which he lost 3bn of his then 3.5bn of net worth. AT&T completely blew it with bad acquisitions and he wasn't allowed to sell his stake. The assets ultimatly ended up at Comecast. I think this still bothers him today. At least you get the impression in this lecture (http://youtu.be/v5QfCLeloEg) he once gave (around the 10 min mark).
Title: Re: LBTYA - Liberty Global
Post by: AJDelphi on February 17, 2015, 02:44:26 PM
Pure speculation here, but in thinking about Malone's experience with the old AT&T and TCI and how that disastrously failed I'm not sure he would be excited about being bought out.

In interviews and the books I've read about him it really sounded like he regretted not having control in that situation so it would surprise me if he did it again.

I feel like Liberty Global will be the company doing the acquiring with Malone maintaining control.
Title: Re: LBTYA - Liberty Global
Post by: wbr on February 17, 2015, 03:14:44 PM
Pure speculation here, but in thinking about Malone's experience with the old AT&T and TCI and how that disastrously failed I'm not sure he would be excited about being bought out.

In interviews and the books I've read about him it really sounded like he regretted not having control in that situation so it would surprise me if he did it again.

I feel like Liberty Global will be the company doing the acquiring with Malone maintaining control.

I think he did not regret selling TCI for a high price. He mainly regretted not being able to sell his AT&T stock and losing billions when it collapsed. So in a future deal he might make sure that he is not locked in like that.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 17, 2015, 04:28:42 PM
Pure speculation here, but in thinking about Malone's experience with the old AT&T and TCI and how that disastrously failed I'm not sure he would be excited about being bought out.

In interviews and the books I've read about him it really sounded like he regretted not having control in that situation so it would surprise me if he did it again.

I feel like Liberty Global will be the company doing the acquiring with Malone maintaining control.

I think he did not regret selling TCI for a high price. He mainly regretted not being able to sell his AT&T stock and losing billions when it collapsed. So in a future deal he might make sure that he is not locked in like that.

That's my impression too. If he sells, it'll be at a really high price, for a mountain of cash or unrestricted very liquid stock. Otherwise, I think he'll be the one doing the buying.
Title: Re: LBTYA - Liberty Global
Post by: loganc on February 17, 2015, 05:31:54 PM
It appears that Malone does regret selling TCI.  See the following interview:

http://video.cnbc.com/gallery/?video=3000160968 (http://video.cnbc.com/gallery/?video=3000160968)

Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 17, 2015, 09:31:36 PM
It appears that Malone does regret selling TCI.  See the following interview:

http://video.cnbc.com/gallery/?video=3000160968 (http://video.cnbc.com/gallery/?video=3000160968)

Yes, I can see him selling but not for the price any of his competitors is willing to pay.

I'm always amazed how open Malone is when he's talking about his strategic decisions. That has hurt him a few times, I think. It bares saying that it's great for shareholders. Probably I'd never have developed the same conviction about the long term prospects of his cable cos if it wasn't for his public reasoning why he went back into the cable business.

On another note, it would make so much sense to merge LBRDA and LBTYA some time when there's the right opportunity to do it. One of the great things about Malone is that he and his lieutenants seem to be the only guys in that business that really have global ambitions.
Title: Re: LBTYA - Liberty Global
Post by: wbr on February 18, 2015, 05:46:23 AM
It appears that Malone does regret selling TCI.  See the following interview:

http://video.cnbc.com/gallery/?video=3000160968 (http://video.cnbc.com/gallery/?video=3000160968)

I've always had that impression as well until I read Cable Cowboys. The book really tells a different story.

Malone was fed up with the regulatory scrutiny and his balance sheet did not have the firepower to make big investments in broadband. Also he was more interested in developing Liberty. So he started looking for a buyer for TCI, but the first attempt to merge with Bell Atlantic failed.

If you listen to what he says today it sounds like the initiative came from AT&T and was an irresistible offer. The truth is that he wanted to sell at a very expensive price to a buyer that was desperately seeking to be relevant in the age of the internet and he was looking for that buyer for years.

But ofc the version he tells the media today sounds much nicer.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 18, 2015, 07:11:35 AM
It appears that Malone does regret selling TCI.  See the following interview:

http://video.cnbc.com/gallery/?video=3000160968 (http://video.cnbc.com/gallery/?video=3000160968)

I've always had that impression as well until I read Cable Cowboys. The book really tells a different story.

Malone was fed up with the regulatory scrutiny and his balance sheet did not have the firepower to make big investments in broadband. Also he was more interested in developing Liberty. So he started looking for a buyer for TCI, but the first attempt to merge with Bell Atlantic failed.

If you listen to what he says today it sounds like the initiative came from AT&T and was an irresistible offer. The truth is that he wanted to sell at a very expensive price to a buyer that was desperately seeking to be relevant in the age of the internet and he was looking for that buyer for years.

But ofc the version he tells the media today sounds much nicer.

I think the two statements don't contradict each other. Now, with hindsight, he regrets what seemed to be a good idea at the time. He underestimated the risk of not being in control of the company he had his net worth invested in. I don't think he'd repeat that mistake.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on February 18, 2015, 07:32:12 AM
I'm curious what happens with Mike White after ATT completes its DTV acquisition.  I'm not sure if he's staying around, but it would seem like the LiLAC group would be a logical spinoff and land place for him.  Afterall much of the growth in DTV is in Latam, even though everyone sees it as a US company.

Mexico looks like a really tough environment to do cable without partnering up.  Besides Chile, what other South American countries have the scale and consumer income to allow a cable buildout?  Maybe Colombia and Brazil?

I'm not sure Mike White likes Liberty.  Liberty wanted to take control of DTV and I think White was against that.  It seemed to me that DTV/White paid Malone to go away.

LiLAC will have assets in Puerto Rico and in Chile.  Not much overlap with DTV in South America.

I think that most of the value creation is in taking poorly managed assets and operating them better.  In Global's portfolio, Virgin was terribly managed and is their biggest opportunity.  I think the European assets will grow earnings more than the Latam assets.  Puerto Rico is mature.  Not sure about Chile but I think it's close to mature.


So what are the attractions of LiLAC as a rollup vehicle?  Would they acquire cable assets in new countries and just operate them better/efficiently?
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 18, 2015, 08:19:37 AM

So what are the attractions of LiLAC as a rollup vehicle?  Would they acquire cable assets in new countries and just operate them better/efficiently?

IMO their advantage in rolling up the region would be that as a tracker, they would benefit from Global's balance sheet and scale.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 18, 2015, 08:27:46 AM

So what are the attractions of LiLAC as a rollup vehicle?  Would they acquire cable assets in new countries and just operate them better/efficiently?

IMO their advantage in rolling up the region would be that as a tracker, they would benefit from Global's balance sheet and scale.

…and thereby using LiLAC shares as an acquisition currency. I couldn't come up with any other rationale for the LiLAC tracking stock. 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 18, 2015, 08:49:50 AM

So what are the attractions of LiLAC as a rollup vehicle?  Would they acquire cable assets in new countries and just operate them better/efficiently?

IMO their advantage in rolling up the region would be that as a tracker, they would benefit from Global's balance sheet and scale.

…and thereby using LiLAC shares as an acquisition currency. I couldn't come up with any other rationale for the LiLAC tracking stock.

Probably some of that, but their cost of debt would also be much lower because of Global.
Title: Re: LBTYA - Liberty Global
Post by: merkhet on February 18, 2015, 09:08:08 AM

So what are the attractions of LiLAC as a rollup vehicle?  Would they acquire cable assets in new countries and just operate them better/efficiently?

IMO their advantage in rolling up the region would be that as a tracker, they would benefit from Global's balance sheet and scale.

…and thereby using LiLAC shares as an acquisition currency. I couldn't come up with any other rationale for the LiLAC tracking stock.

Probably some of that, but their cost of debt would also be much lower because of Global.

I think Maffei mentioned in an interview that they figure LiLAC will be a faster grower while Europe will not.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 18, 2015, 09:13:33 AM
I think Maffei mentioned in an interview that they figure LiLAC will be a faster grower while Europe will not.

I don't remember the exact quote, but I think he said that they had very different risk profiles, and that since LILAC was so much smaller than the European operations, inside Global it wasn't moving the needle, but on its own, it might be something that some people looking for that different profile might want to invest in directly. That's how I understood it, anyway.

It's a bit like splitting QVC from the small Liberty Interactive e-commerce businesses (though obviously that's not a perfect analogy).
Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 18, 2015, 10:12:13 AM
I think Maffei mentioned in an interview that they figure LiLAC will be a faster grower while Europe will not.

I don't remember the exact quote, but I think he said that they had very different risk profiles, and that since LILAC was so much smaller than the European operations, inside Global it wasn't moving the needle, but on its own, it might be something that some people looking for that different profile might want to invest in directly. That's how I understood it, anyway.

It's a bit like splitting QVC from the small Liberty Interactive e-commerce businesses (though obviously that's not a perfect analogy).

Yes, I've heard him say this, too, but I don't buy it as the main reasoning behind this tracker. This would make sense if LiLAC were significantly larger but with a size that small you could also make the point that this tracking stock doesn't move the needle for existing shareholders, so why doing it at all?
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on February 18, 2015, 10:13:54 AM
As I had previously mentioned, the rationale behind a tracking stock as opposed to a spin off is you get a transaction currency in the tracker and you can retain the balance sheet benefit of a larger combined company. In of the interviews/talks of Malone or in one of the books he mentions this. I forget exactly where. I think he mentions you need a benevolent dictator at the top of both these companies for such an arrangement to work!

I think LILA could be TCI 3.0 (Latam roll up). Very interesting tracker characteristics as well. Its small enough to cause institutions to dispose it off. Others who bet on Malone's methods can accumulate and benefit.
Title: Re: LBTYA - Liberty Global
Post by: jay21 on February 18, 2015, 10:15:28 AM
As I had previously mentioned, the rationale behind a tracking stock as opposed to a spin off is you get a transaction currency in the tracker and you can retain the balance sheet benefit of a larger combined company. In of the interviews/talks of Malone or in one of the books he mentions this. I forget exactly where. I think he mentions you need a benevolent dictator at the top of both these companies for such an arrangement to work!

I think LILA could be TCI 3.0 (Latam roll up). Very interesting tracker characteristics as well. Its small enough to cause institutions to dispose it off. Others who bet on Malone's methods can accumulate and benefit.

I know he mentioned that if you have a growing unprofitable business, it is more valuable in a larger profitable company because the tax deductions are immediate instead of being deferred as NOLs.
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on February 18, 2015, 10:23:13 AM
As I had previously mentioned, the rationale behind a tracking stock as opposed to a spin off is you get a transaction currency in the tracker and you can retain the balance sheet benefit of a larger combined company. In of the interviews/talks of Malone or in one of the books he mentions this. I forget exactly where. I think he mentions you need a benevolent dictator at the top of both these companies for such an arrangement to work!

I think LILA could be TCI 3.0 (Latam roll up). Very interesting tracker characteristics as well. Its small enough to cause institutions to dispose it off. Others who bet on Malone's methods can accumulate and benefit.

I know he mentioned that if you have a growing unprofitable business, it is more valuable in a larger profitable company because the tax deductions are immediate instead of being deferred as NOLs.

There you go, that's another benefit. Taxes are always part of every rationale with Malone companies. I wish more operators were like this.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 18, 2015, 10:30:49 AM
Yes, I've heard him say this, too, but I don't buy it as the main reasoning behind this tracker. This would make sense if LiLAC were significantly larger but with a size that small you could also make the point that this tracking stock doesn't move the needle for existing shareholders, so why doing it at all?

Because a shareholder who likes it can buy more of it, thus making it big enough in their portfolio to move the needle, unlike when it was inside of LBTYA.

I think the reasons are multiple: Having a stock currency, better targeting buybacks only at European operations, sharing the balance sheet yet allowing shareholders to concentrate more in one or the other, etc.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 18, 2015, 10:36:50 AM
Yes, I've heard him say this, too, but I don't buy it as the main reasoning behind this tracker. This would make sense if LiLAC were significantly larger but with a size that small you could also make the point that this tracking stock doesn't move the needle for existing shareholders, so why doing it at all?

Because a shareholder who likes it can buy more of it, thus making it big enough in their portfolio to move the needle, unlike when it was inside of LBTYA.

I think the reasons are multiple: Having a stock currency, better targeting buybacks only at European operations, sharing the balance sheet yet allowing shareholders to concentrate more in one or the other, etc.

Thanks, I forgot the buyback aspect of it. Your other reason would also imply that you'd have to become very interested in it. This is Malone basically saying: I'd think about buying a little bit more or this. He wouldn't do it for the people who "don't want" LatAm exposure when this exposure has only been 5% of LBTYA and they have the risk exposure via the shared balance sheet none the less.


As I had previously mentioned, the rationale behind a tracking stock as opposed to a spin off is you get a transaction currency in the tracker and you can retain the balance sheet benefit of a larger combined company. In of the interviews/talks of Malone or in one of the books he mentions this. I forget exactly where. I think he mentions you need a benevolent dictator at the top of both these companies for such an arrangement to work!

I think LILA could be TCI 3.0 (Latam roll up). Very interesting tracker characteristics as well. Its small enough to cause institutions to dispose it off. Others who bet on Malone's methods can accumulate and benefit.

I know he mentioned that if you have a growing unprofitable business, it is more valuable in a larger profitable company because the tax deductions are immediate instead of being deferred as NOLs.

There you go, that's another benefit. Taxes are always part of every rationale with Malone companies. I wish more operators were like this.

Yes, but taxes and the shared balance sheet are only the reasons for a tracker and against a complete spin-off. This doesn't explain why he doesn't keep everything like it is. It has to be like rpadebet and Liberty just explained. So thanks, guys!
Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on February 18, 2015, 10:54:43 AM
I think another advantage of LiLAC is that it can eventually be reorganized as a separate entity and merged with a US cable co (example Charter). This will result in operational efficiencies due to lower content costs. I think Malone once said that their Puerto Rican cable co can save save $40-50M annually in content costs if they were to be a part of a larger US cable co. 
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on February 18, 2015, 11:13:10 AM
I think another advantage of LiLAC is that it can eventually be reorganized as a separate entity and merged with a US cable co (example Charter). This will result in operational efficiencies due to lower content costs. I think Malone once said that their Puerto Rican cable co can save save $40-50M annually in content costs if they were to be a part of a larger US cable co.

Actually if he just wanted to sell PR Cable, I think he would just do that. The only reason he would want to go through this trouble of a tracker is if he is planning another roll up. Latam cable is fragmented. Lots of small operators. I think the playbook fits perfectly yet again here.
Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on February 18, 2015, 11:22:06 AM
I said "eventually". I meant he could merge it with a US entity after the roll-up game is played out in Latam.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on February 18, 2015, 11:33:19 AM
I think another advantage of LiLAC is that it can eventually be reorganized as a separate entity and merged with a US cable co (example Charter). This will result in operational efficiencies due to lower content costs. I think Malone once said that their Puerto Rican cable co can save save $40-50M annually in content costs if they were to be a part of a larger US cable co.

Actually if he just wanted to sell PR Cable, I think he would just do that. The only reason he would want to go through this trouble of a tracker is if he is planning another roll up. Latam cable is fragmented. Lots of small operators. I think the playbook fits perfectly yet again here.

Thanks all for a stimulating discussion!  Stumbled upon this website that has a listing of cable and DBS operations by country in Latam.  So now it seems that compared to cable, DBS enjoys a cost advantage on the pay TV side but once you are talking about broadband, then it's a whole other game.  Are there any studies about how Latam consumers generally access the Internet?  Are they like many in Asia heavily mobile 3G/4G skewed in terms of data?  If so, what's the argument that a double play (TV/broadband) or a triple (TV/broadband/phone) will make any in roads in the region?

http://www.zonalatina.com/CableOps.htm
Title: Re: LBTYA - Liberty Global
Post by: ni-co on March 03, 2015, 01:58:28 AM
Btw if you want to take a look at a hot candidate for LBTYA's next acquisition target, take a look at Tele Columbus (TC1).

For the interested: I've written up my investment thesis for TC1 in a very short way:
http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/tele-columbus-tc1/
Title: Re: LBTYA - Liberty Global
Post by: kab60 on April 20, 2015, 03:21:04 AM
Liberty Global’s Subsidiary Telenet to Acquire BASE for 1.3b euro: http://www.libertyglobal.com/pdf/press-release/Liberty-Global-BASE-Acquisition-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: Liberty on April 20, 2015, 05:38:06 AM
Price post-synergies seems good. Probably main benefit will come from quad play reducing churn on the cable business.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on April 21, 2015, 06:13:13 AM
http://www.wsj.com/articles/belgium-could-signal-libertys-change-of-heart-1429544989
Title: Re: LBTYA - Liberty Global
Post by: LowIQinvestor on April 21, 2015, 07:02:08 AM
Interesting news about Liberty getting deeper into mobile.

I wouldn't discount Sky Plc. as a top competitor:

http://www.wsj.com/articles/sky-earnings-boosted-by-subscriber-growth-in-u-k-germany-1429608660?mod=yahoo_hs

http://www.wsj.com/articles/sky-telefonica-u-k-announce-mobile-telecom-partnership-1422531774
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 08, 2015, 06:06:27 AM
Q1:

http://www.libertyglobal.com/pdf/presentations/Liberty-Global-Q1-2015-Investor-Call-Presentation-FINAL.pdf

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Earnings-Release-Q1-15-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 19, 2015, 12:45:38 PM
http://www.bloomberg.com/news/articles/2015-05-19/malone-says-liberty-vodafone-make-great-fit-in-western-europe

Malone Says Liberty, Vodafone Make ‘Great Fit’ in Europe
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 28, 2015, 12:08:04 PM
http://www.reuters.com/article/2015/05/28/vodafone-liberty-investors-idUSL5N0YJ1FC20150528
Title: Re: LBTYA - Liberty Global
Post by: loganc on May 28, 2015, 04:49:27 PM
http://www.reuters.com/article/2015/05/28/vodafone-liberty-investors-idUSL5N0YJ1FC20150528

Very interesting to think about the potential of a deal here.  What are the chances that they would be able to keep Kabel Deutchland? 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 02, 2015, 10:21:46 AM
WSJ on possible LBTYA and VOD deal:

http://www.wsj.com/articles/liberty-globals-reach-for-vodafone-could-fall-short-1433262523
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 04, 2015, 03:06:30 PM
Again:

http://www.bloomberg.com/news/articles/2015-06-04/vodafone-said-to-discuss-options-including-a-merger-with-liberty
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 05, 2015, 03:12:24 AM
Talks for asset swap:

http://bloom.bg/1KItWqj
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 06, 2015, 02:03:01 PM
The plot thickens...

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/telecoms/11655806/Liberty-boss-in-secret-talks-over-merger-with-Vodafone.html
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 09, 2015, 03:02:53 PM
http://www.wsj.com/articles/liberty-global-ceo-sees-mobile-services-as-important-growth-driver-for-cable-firms-1433864787
Title: Re: LBTYA - Liberty Global
Post by: saltybit on June 09, 2015, 03:40:46 PM
Is there a nice summary somewhere of the landscape and all the mergers happening in the telecom and cable space in Europe?

Edit:
The best one I found so far is this: http://www.wsj.com/articles/european-telecom-companies-race-to-merge-1433160138
Title: Re: LBTYA - Liberty Global
Post by: AJDelphi on June 25, 2015, 10:54:18 AM
Missed the Annual Meeting webcast. Did anyone record it by chance?! 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 25, 2015, 11:02:49 AM
Missed the Annual Meeting webcast. Did anyone record it by chance?!

Isn't it here? http://www.libertyglobal.com/ir-presentations-webcasts.html
Title: Re: LBTYA - Liberty Global
Post by: AJDelphi on June 25, 2015, 11:18:51 AM
For me it just says "The live webcast has ended" with the typical webcast music
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 25, 2015, 11:39:48 AM
For me it just says "The live webcast has ended" with the typical webcast music

It'll probably be uploaded later.

Here's my recording. I didn't get the formal part of it, and there were a few technical problems at the beginning. This is Fries' presentation plus some Q&A:

https://www.dropbox.com/s/rjpffg0usi29n3m/2015-june-AGM-LBTYA.m4a?dl=0
Title: Re: LBTYA - Liberty Global
Post by: merkhet on June 25, 2015, 11:58:51 AM
For me it just says "The live webcast has ended" with the typical webcast music

It'll probably be uploaded later.

Here's my recording. I didn't get the formal part of it, and there were a few technical problems at the beginning. This is Fries' presentation plus some Q&A:

https://www.dropbox.com/s/rjpffg0usi29n3m/2015-june-AGM-LBTYA.m4a?dl=0

Awesome. Thanks!
Title: Re: LBTYA - Liberty Global
Post by: AJDelphi on June 25, 2015, 01:33:20 PM
Liberty, I knew you were always good for recordings! Many Thanks :)
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 30, 2015, 07:47:53 AM
LILAC presentation:

http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on June 30, 2015, 08:23:48 PM
LILAC presentation:

http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf

Thank you liberty. This is one stock I was so looking forward to this year.  Hope it trades at a reasonable price to allow me to accumulate.

Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share

Edit:  just saw the when issued trading at around 38. Maybe I am missing something here.  Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill.  Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs.  Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing?
Title: Re: LBTYA - Liberty Global
Post by: junto.investing on July 01, 2015, 04:18:00 AM
LILAC presentation:

http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf

Thank you liberty. This is one stock I was so looking forward to this year.  Hope it trades at a reasonable price to allow me to accumulate.

Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share

Edit:  just saw the when issued trading at around 38. Maybe I am missing something here.  Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill.  Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs.  Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing?

If you can get it at $38 - agreed, it's cheap. However, the spread on this thing has been crazy.
Title: Re: LBTYA - Liberty Global
Post by: rico1181 on July 01, 2015, 06:13:00 AM
Rpadebet:

Not sure how you came up with 8x FCF. Depending on how one calculates FCF, I came up with a range of 75mm - 115mm for 2014 FCF. This would imply a multiple of 15x-23x FCF. Am I missing something here?

LILAC presentation:

http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf

Thank you liberty. This is one stock I was so looking forward to this year.  Hope it trades at a reasonable price to allow me to accumulate.

Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share

Edit:  just saw the when issued trading at around 38. Maybe I am missing something here.  Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill.  Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs.  Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing?
Title: Re: LBTYA - Liberty Global
Post by: Fat Pitch on July 01, 2015, 04:15:51 PM
LILAC presentation:

http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf

Thank you liberty. This is one stock I was so looking forward to this year.  Hope it trades at a reasonable price to allow me to accumulate.

Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share

Edit:  just saw the when issued trading at around 38. Maybe I am missing something here.  Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill.  Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs.  Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing?

Careful OCF is not the same as cash flow from operations. According to their appendix

"As we use the term, operating cash flow is defined as revenue less operating and selling, general and administrative expenses (excluding sharebased compensation, depreciation and amortization, provisions and provision releases related to significant litigation and impairment, restructuring and other operating
items)"

That means interest expense and taxes are not subtracted out from their figures. FCF is probably about 110mm.

The question here is how fast will that FCF increase? There's operating leverage at play here, but for every $1 in revenue how much of that trickles down to FCF?
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on July 01, 2015, 05:02:09 PM
LILAC presentation:

http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf

Thank you liberty. This is one stock I was so looking forward to this year.  Hope it trades at a reasonable price to allow me to accumulate.

Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share

Edit:  just saw the when issued trading at around 38. Maybe I am missing something here.  Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill.  Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs.  Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing?

Careful OCF is not the same as cash flow from operations. According to their appendix

"As we use the term, operating cash flow is defined as revenue less operating and selling, general and administrative expenses (excluding sharebased compensation, depreciation and amortization, provisions and provision releases related to significant litigation and impairment, restructuring and other operating
items)"

That means interest expense and taxes are not subtracted out from their figures. FCF is probably about 110mm.

The question here is how fast will that FCF increase? There's operating leverage at play here, but for every $1 in revenue how much of that trickles down to FCF?

Thanks. I did not see that, so basically  their OCF is Closer to ebitda than true OCF. I still think based on the other multiples it seems cheaper given their runway @38. But who knows where it will actually trade..
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 02, 2015, 03:01:46 PM
I think LILA is very attractive at these prices. Think about Malone's rule of thumb of buying cable cos at 10x EV/EBITDA. Add to this the most attractive growth prospects in the industry. Look at how ripe Latin America is for a roll up. And also keep in mind that they share their balance sheet with LBTYA and are therefore in prime position to perform this roll up. I'm in search of businesses that are going to generate sustainable, ideally growing cash flows in a low growth world and LILA might just be such a business.
Title: Re: LBTYA - Liberty Global
Post by: loganc on July 03, 2015, 01:49:24 PM
I think LILA is very attractive at these prices. Think about Malone's rule of thumb of buying cable cos at 10x EV/EBITDA. Add to this the most attractive growth prospects in the industry. Look at how ripe Latin America is for a roll up. And also keep in mind that they share their balance sheet with LBTYA and are therefore in prime position to perform this roll up. I'm in search of businesses that are going to generate sustainable, ideally growing cash flows in a low growth world and LILA might just be such a business.

When you are doing the EV/EBITDA calculation, how are you thinking about the fact that Liberty PR has a significant minority interest?  It seems to me like the easiest way to get to a valuation that accounts for the minority interest is a FCF per share calculation. 

That being said, I don't think it is that hard to get close to 10x if one computes the EV/EBITDA just based on VTR (i.e. ignoring Liberty PR+Choice debt and EBITDA and keeping equity value the same) assuming some margin expansion at VTR.
 
Title: Re: LBTYA - Liberty Global
Post by: Packer16 on July 04, 2015, 04:30:51 PM
I think LILA is very attractive at these prices. Think about Malone's rule of thumb of buying cable cos at 10x EV/EBITDA. Add to this the most attractive growth prospects in the industry. Look at how ripe Latin America is for a roll up. And also keep in mind that they share their balance sheet with LBTYA and are therefore in prime position to perform this roll up. I'm in search of businesses that are going to generate sustainable, ideally growing cash flows in a low growth world and LILA might just be such a business.

Malone's rule of thumb from the Outsiders was to buy systems at 5x EBITDA, sell them at 10x EBITDA and buyback stock at 7x EBITDA.  He would also target 5x EBITDA leverage.

Packer
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 05, 2015, 01:07:29 AM
I think LILA is very attractive at these prices. Think about Malone's rule of thumb of buying cable cos at 10x EV/EBITDA. Add to this the most attractive growth prospects in the industry. Look at how ripe Latin America is for a roll up. And also keep in mind that they share their balance sheet with LBTYA and are therefore in prime position to perform this roll up. I'm in search of businesses that are going to generate sustainable, ideally growing cash flows in a low growth world and LILA might just be such a business.

When you are doing the EV/EBITDA calculation, how are you thinking about the fact that Liberty PR has a significant minority interest?  It seems to me like the easiest way to get to a valuation that accounts for the minority interest is a FCF per share calculation. 

That being said, I don't think it is that hard to get close to 10x if one computes the EV/EBITDA just based on VTR (i.e. ignoring Liberty PR+Choice debt and EBITDA and keeping equity value the same) assuming some margin expansion at VTR.

Using their OCF numbers as a proxy for EBITDA, my back of the envelope calculation:

LiLAC
OCF: $480
Debt: $2070

Minority Interest PR:
OCF: $200 x 0.4 = $80
Debt: $670 x 0.4 = $270

LiLAC net:
OCF: $400
Debt: $1,800
Market Cap: 43.9m shares x $50 = $2,200m
Net EV $1,800m + $2,200m = $4,000m

EV/EBITDA = 4,000/400 = 10


Malone's rule of thumb from the Outsiders was to buy systems at 5x EBITDA, sell them at 10x EBITDA and buyback stock at 7x EBITDA.  He would also target 5x EBITDA leverage.

Packer

Malone looks at levered cash flows. So, the multiple is highly dependent on the general level of interest rates/financing cost. The lower the cost of the company's leverage (which it can lock in for the mid to long term) the higher the price you can pay for companies with very steady cash flows. I'm pretty sure that Malone (could also have been Mike Fries or Greg Maffei) has mentioned in an interview within the last 2-3 years that he generally considers prices up to 10x to be reasonable considering the low cost of leverage.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 05, 2015, 01:37:54 AM
I think the way to think about this and the way Malone probably thinks about this is: EBITDA/EV is your gross return before borrowing cost. So, at 10x a company generates a 10% gross ROI – with the "I" being your investment into the company as a shareholder. If it's finance cost is 5.5% (which is the case for LBTYA) buying it at a 10% return is a good price. If the borrowing cost is closer to 8%, which it was a few years ago, a 10x multiple is probably too expensive. You can't just slap a multiple on a company and say: This is cheap/expensive.

Keep in mind that this only works with steady (ideally even growing) cash flows. You have to be able to calculate future cash flows with a high probability, otherwise levering up the balance sheet is very risky. This is why this line of thinking makes sense for a cable co but doesn't make sense for almost any "normal" company.

It also doesn't take into account maintenance capex and tax. As long as you optimize for low GAAP earnings taxes are under control (Malone: "I'd rather pay interest than taxes."). And for cable networks maintenance capex is also very low once you've built your network.
Title: Re: LBTYA - Liberty Global
Post by: Packer16 on July 05, 2015, 03:51:32 AM
Your math makes sense however, I would like to see the reference as 10x EBITDA was his selling point a few years ago.  I found the following which states 7-8x EV/EBIDTA makes sense post synergy with 3% interest rates:

http://brooklyninvestor.blogspot.com/2013/05/charter-communications-chtr.html

Other Outsiders have used unlevered low double digit return on investment as good buying points also and the 7-8x is more consistent with this valuation level. 

Packer
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on July 05, 2015, 07:08:31 AM
It also doesn't take into account maintenance capex and tax. As long as you optimize for low GAAP earnings taxes are under control (Malone: "I'd rather pay interest than taxes.").

GAAP and tax accounting are two different things.  GAAP accounting will have a reconciliation between the taxes paid and GAAP tax expense.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on July 05, 2015, 07:17:53 AM
In regards to the spinoff, I think investors should be more excited about Charter than Liberty Global, and more excited about Global than LILAC.

In terms of earnings growth, I think that Charter has the most potential.  Charter is coming from a base with low penetration and poor operations.  So it has a lot of potential from increased penetration, better customer service / less churn, etc. etc.  Similarly, Global's assets have lower penetration than LILAC assets.  They have a lot more room for growth.

I also think that Rutledge is a better CEO than Fries.  For example, Liberty Global customers hate their set-top box due to serious user interface issues and Global's MyPrime over-the-top service looks like it will fail.  MyPrime has very poor reviews relative to Netflix if both services are available in a particular country.
Title: Re: LBTYA - Liberty Global
Post by: loganc on July 05, 2015, 07:51:57 AM
In regards to the spinoff, I think investors should be more excited about Charter than Liberty Global, and more excited about Global than LILAC.

In terms of earnings growth, I think that Charter has the most potential.  Charter is coming from a base with low penetration and poor operations.  So it has a lot of potential from increased penetration, better customer service / less churn, etc. etc.  Similarly, Global's assets have lower penetration than LILAC assets.  They have a lot more room for growth.

I also think that Rutledge is a better CEO than Fries.  For example, Liberty Global customers hate their set-top box due to serious user interface issues and Global's MyPrime over-the-top service looks like it will fail.  MyPrime has very poor reviews relative to Netflix if both services are available in a particular country.

If LILAC didn't offer a differentiated investment opportunity (i.e. higher growth potential in a higher risk geography)  to Global, then why do the tracking stock in the first place?   
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 05, 2015, 08:57:43 AM
In regards to the spinoff, I think investors should be more excited about Charter than Liberty Global, and more excited about Global than LILAC.

In terms of earnings growth, I think that Charter has the most potential.  Charter is coming from a base with low penetration and poor operations.  So it has a lot of potential from increased penetration, better customer service / less churn, etc. etc.  Similarly, Global's assets have lower penetration than LILAC assets.  They have a lot more room for growth.

I also think that Rutledge is a better CEO than Fries.  For example, Liberty Global customers hate their set-top box due to serious user interface issues and Global's MyPrime over-the-top service looks like it will fail.  MyPrime has very poor reviews relative to Netflix if both services are available in a particular country.

Where do you get your info about customer satisfaction/quality of the products and how do you avoid sample bias?
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on July 05, 2015, 09:35:38 AM
If LILAC didn't offer a differentiated investment opportunity (i.e. higher growth potential in a higher risk geography)  to Global, then why do the tracking stock in the first place?   

Because Malone knows that investors may be misled by the tracking stock.  LILAC mostly consists of mature assets without that much room for potential because it's a post turnaround asset.  Global consists largely of UK assets from Virgin Media, which has a lot of turnaround potential.

LILAC is also a story stock on the growth of Latin America.

Quote
Where do you get your info about customer satisfaction/quality of the products and how do you avoid sample bias?

Reddit.com is one place to look for comments on the Horizon set-top box. 
https://www.reddit.com/r/ireland/comments/2ms02g/1_year_on_how_is_the_upc_horizon_tv_service/

Sample bias is an issue.  I suppose that you can find every single comment on Reddit about the Horizon box, and try to objectively categorize each comment as positive, neutral, or negative.  Reddit has some neutral comments but I don't remember any positive comments.
Title: Re: LBTYA - Liberty Global
Post by: loganc on July 05, 2015, 10:09:58 AM
If LILAC didn't offer a differentiated investment opportunity (i.e. higher growth potential in a higher risk geography)  to Global, then why do the tracking stock in the first place?   

Because Malone knows that investors may be misled by the tracking stock.  LILAC mostly consists of mature assets without that much room for potential because it's a post turnaround asset.  Global consists largely of UK assets from Virgin Media, which has a lot of turnaround potential.

LILAC is also a story stock on the growth of Latin America.

Then why did they trade approximately 422MM of LBTYK stock for the 20% minority interest of VTR in early 2014?    Why not issue a tracking stock where the attributable assets would be the 80% VTR and 60% LCPR interests?       
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 05, 2015, 01:44:59 PM
Malone hasn't come over as a ruthless stock promoter so far. He does those transactions because they make financial sense and he's normally quite candid with his motives. He said that it's time for a roll-up in Latin America. He needs the stock as acquisition currency and of course he wants to highlight a small but rapidly growing part of Global which are both reasons why I'm interested. I don't get the feeling that Malone wants to push his stock on me.

I own Liberty Global largely for their broadband networks and especially for their growth potential in the b2b sector. Set-top boxes are a secondary concern for me.

Regarding EBITDA multiples: Global paid 9.3x post synergies (11+ pre synergies) for Ziggo. I doubt that they'd sell it at 10x.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 06, 2015, 11:38:07 AM
http://www.hollywoodreporter.com/news/liberty-global-acquires-irelands-tv3-802415
Title: Re: LBTYA - Liberty Global
Post by: Buffetteer on July 06, 2015, 06:55:28 PM
So if I own 240 shares of LBTYA should I have received 12 shares of LiLAK?

Quote
At the close of trading today, July 1, 2015, Liberty Global distributed, as a dividend (or a “bonus issue” under U.K. law), to holders of its Class A, Class B and Class C ordinary shares as of 5:00 p.m. Eastern time on June 24, 2015 (the “record date”), one share of the corresponding class of LiLAC Group ordinary shares for each 20 Liberty Global ordinary shares held by each shareholder as of the record date. We distributed approximately 12.6 million LILA, 0.5 million LILAB and 30.8 million LILAK shares in total. Cash will be paid in lieu of fractional LiLAC Group ordinary shares.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 07, 2015, 04:03:30 AM
So if I own 240 shares of LBTYA should I have received 12 shares of LiLAK?

Quote
At the close of trading today, July 1, 2015, Liberty Global distributed, as a dividend (or a “bonus issue” under U.K. law), to holders of its Class A, Class B and Class C ordinary shares as of 5:00 p.m. Eastern time on June 24, 2015 (the “record date”), one share of the corresponding class of LiLAC Group ordinary shares for each 20 Liberty Global ordinary shares held by each shareholder as of the record date. We distributed approximately 12.6 million LILA, 0.5 million LILAB and 30.8 million LILAK shares in total. Cash will be paid in lieu of fractional LiLAC Group ordinary shares.

If you have LBTYA you should have received 12 shares of LILA.

LBTYK gets LILAK.
Title: Re: LBTYA - Liberty Global
Post by: Buffetteer on July 07, 2015, 07:02:35 AM
Thanks Liberty. Spoke to my brokerage, and yes I will be receiving the shares. As I haven't seen them added to my account yet I was somewhat concerned, but apparently it takes about two weeks for the transfer to take place.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 07, 2015, 07:20:24 AM
Thanks Liberty. Spoke to my brokerage, and yes I will be receiving the shares. As I haven't seen them added to my account yet I was somewhat concerned, but apparently it takes about two weeks for the transfer to take place.

That seems slow. I'm with Interactive Brokers (in Canada) and think I got the shares on july 2.
Title: Re: LBTYA - Liberty Global
Post by: Buffetteer on July 07, 2015, 05:15:42 PM
Whoa! I should switch, I'm with WebBroker.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on July 08, 2015, 09:56:26 AM
Sorry to ask a newbie question. Could anyone please tell me what the leverage ratio is calculated? Is that EBITDA/interest expense? Or total Debt/EBITDA?
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on July 08, 2015, 12:12:41 PM
Muscleman - it's the latter (Debt / EBITDA).  The other one (EBITDA / Interest) is the Interest Coverage Ratio. 

Keep in mind as well that it's normally calculated off of Adjusted EBITDA - which adjusts for one off items and writedowns and (often) stock based comp.
Title: Re: LBTYA - Liberty Global
Post by: folivera13 on July 09, 2015, 02:13:58 PM
Does anyone know if there are more recent filings on LILA than these?
S-4: http://www.sec.gov/Archives/edgar/data/1570585/000119312514453670/d794201ds4a.htm
Proxy: http://www.sec.gov/Archives/edgar/data/1570585/000119312514455700/d794201d424b3.htm
Title: Re: LBTYA - Liberty Global
Post by: folivera13 on July 09, 2015, 02:28:53 PM
Does anyone know if there are more recent filings on LILA than these?
S-4: http://www.sec.gov/Archives/edgar/data/1570585/000119312514453670/d794201ds4a.htm
Proxy: http://www.sec.gov/Archives/edgar/data/1570585/000119312514455700/d794201d424b3.htm

Also does anyone know if the $480mm Mike Fries mentions here is net of the minority interest? I think it is based on my calcs but just wanted to check! http://www.sec.gov/Archives/edgar/data/1570585/000157058515000030/a425script2-13x15lilac.htm
Title: Re: LBTYA - Liberty Global
Post by: Fat Pitch on July 09, 2015, 02:50:15 PM
Does anyone know if there are more recent filings on LILA than these?
S-4: http://www.sec.gov/Archives/edgar/data/1570585/000119312514453670/d794201ds4a.htm
Proxy: http://www.sec.gov/Archives/edgar/data/1570585/000119312514455700/d794201d424b3.htm

Also does anyone know if the $480mm Mike Fries mentions here is net of the minority interest? I think it is based on my calcs but just wanted to check! http://www.sec.gov/Archives/edgar/data/1570585/000157058515000030/a425script2-13x15lilac.htm

I'm thinking it is net of minority interest as well.

Does anyone here know the total PP&E LILAC currently has? According to this http://www.sec.gov/Archives/edgar/data/1570585/000157058515000101/exhibit991-trackerxq42014r.htm it is listed at 869mm, but I don't think it includes their latest acquisition. I'm rerunning my previous calcs and I'm realizing the FCF is a lot higher than what some (including I) has posted.

This is looking very attractive, but you have risk exposure to the Chilean Peso.
Title: Re: LBTYA - Liberty Global
Post by: folivera13 on July 09, 2015, 02:59:24 PM
Does anyone know if there are more recent filings on LILA than these?
S-4: http://www.sec.gov/Archives/edgar/data/1570585/000119312514453670/d794201ds4a.htm
Proxy: http://www.sec.gov/Archives/edgar/data/1570585/000119312514455700/d794201d424b3.htm

Also does anyone know if the $480mm Mike Fries mentions here is net of the minority interest? I think it is based on my calcs but just wanted to check! http://www.sec.gov/Archives/edgar/data/1570585/000157058515000030/a425script2-13x15lilac.htm

I'm thinking it is net of minority interest as well.

Does anyone here know the total PP&E LILAC currently has? According to this http://www.sec.gov/Archives/edgar/data/1570585/000157058515000101/exhibit991-trackerxq42014r.htm it is listed at 869mm, but I don't think it includes their latest acquisition. I'm rerunning my previous calcs and I'm realizing the FCF is a lot higher than what some (including I) has posted.

This is looking very attractive, but you have risk exposure to the Chilean Peso.

I think you are using the 2013 numbers, but either way I have not seen numbers with Choice acquisition
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 09, 2015, 10:34:46 PM
Does anyone know if there are more recent filings on LILA than these?
S-4: http://www.sec.gov/Archives/edgar/data/1570585/000119312514453670/d794201ds4a.htm
Proxy: http://www.sec.gov/Archives/edgar/data/1570585/000119312514455700/d794201d424b3.htm

Also does anyone know if the $480mm Mike Fries mentions here is net of the minority interest? I think it is based on my calcs but just wanted to check! http://www.sec.gov/Archives/edgar/data/1570585/000157058515000030/a425script2-13x15lilac.htm

I'm thinking it is net of minority interest as well.

Does anyone here know the total PP&E LILAC currently has? According to this http://www.sec.gov/Archives/edgar/data/1570585/000157058515000101/exhibit991-trackerxq42014r.htm it is listed at 869mm, but I don't think it includes their latest acquisition. I'm rerunning my previous calcs and I'm realizing the FCF is a lot higher than what some (including I) has posted.

This is looking very attractive, but you have risk exposure to the Chilean Peso.

I think you are using the 2013 numbers, but either way I have not seen numbers with Choice acquisition

As has been mentioned above in this thread, I think the numbers are including minority interest because Liberty would mention it if they were adjusted. The numbers are meant to show the operating performance of the whole business, not so much the value of the cash flows for shareholders, I think. The newest information I found is this presentation that has been linked here before:
http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf

Keep in mind that their "OCF" numbers don't account for interest and tax payments, so it's closer to EBITDA.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 10, 2015, 11:52:27 AM
In regards to the spinoff, I think investors should be more excited about Charter than Liberty Global, and more excited about Global than LILAC.

In terms of earnings growth, I think that Charter has the most potential.  Charter is coming from a base with low penetration and poor operations.  So it has a lot of potential from increased penetration, better customer service / less churn, etc. etc.  Similarly, Global's assets have lower penetration than LILAC assets.  They have a lot more room for growth.

I also think that Rutledge is a better CEO than Fries.  For example, Liberty Global customers hate their set-top box due to serious user interface issues and Global's MyPrime over-the-top service looks like it will fail.  MyPrime has very poor reviews relative to Netflix if both services are available in a particular country.

I've been thinking about your comment for a while. I think both companies are equally exciting for slightly different reasons. With Charter it's Rutledge's operating skills zoomed to "new Charter" that excites me. With LBTYA it's that 1. cable broadband is in its infancy in Europe and 2. the possibility of integrating European mobile networks with cable cos.

There are so many opportunities for building scale and tons of cheap money around. And Malone is not only able to but actually makes good use of it. This is a climate which is really made for him. I own LBTYA, LILA, LBRDA and TC1 and owning those steadily growing, recession proof cash flows in this cheap financing environment makes me feel like a kid in a candy store.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 13, 2015, 12:52:15 PM
Looks like index funds might be done dumping LILA/LILAK... We'll know for sure over time.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 13, 2015, 01:16:08 PM
Looks like index funds might be done dumping LILA/LILAK... We'll know for sure over time.

Some of them were dumped right into my hands. Gotta love spin-off dynamics (or tracking stock dynamics as "we were tutored to know") :)
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 14, 2015, 09:29:21 AM
Looks like index funds might be done dumping LILA/LILAK... We'll know for sure over time.

Some of them were dumped right into my hands. Gotta love spin-off dynamics (or tracking stock dynamics as "we were tutored to know") :)

I still can't believe one of my orders was filled at 41 on friday morning :)

In other news (via Bluegrass Capital), Digicel is filing for IPO in the region:

https://www.sec.gov/Archives/edgar/data/1645826/000119312515236163/d946689df1.htm

Potential target for LILAK? Maybe buying just some assets?
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 14, 2015, 11:23:14 AM
Looks like index funds might be done dumping LILA/LILAK... We'll know for sure over time.

Some of them were dumped right into my hands. Gotta love spin-off dynamics (or tracking stock dynamics as "we were tutored to know") :)

I still can't believe one of my orders was filled at 41 on friday morning :)

In other news (via Bluegrass Capital), Digicel is filing for IPO in the region:

https://www.sec.gov/Archives/edgar/data/1645826/000119312515236163/d946689df1.htm

Potential target for LILAK? Maybe buying just some assets?

Nice. Looks interesting, thanks Liberty!
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 14, 2015, 11:50:58 AM
Looks like index funds might be done dumping LILA/LILAK... We'll know for sure over time.

Some of them were dumped right into my hands. Gotta love spin-off dynamics (or tracking stock dynamics as "we were tutored to know") :)

I still can't believe one of my orders was filled at 41 on friday morning :)

In other news (via Bluegrass Capital), Digicel is filing for IPO in the region:

https://www.sec.gov/Archives/edgar/data/1645826/000119312515236163/d946689df1.htm

Potential target for LILAK? Maybe buying just some assets?

Nice. Looks interesting, thanks Liberty!

I get the feeling that Digicel, CWC, LILAC, and Grupo Televisa will do all kinds of deals in the coming years...
Title: Re: LBTYA - Liberty Global
Post by: Ham Hockers on July 14, 2015, 11:58:59 AM
Posted this in a separate thread but really meant here. To the people who own some of these Liberty tracking stocks: what is it you actually own when you own a tracking stock? Is it a bonafide, no shit, economic interest in a sub, but with no voting rights? Or is it more like a promise that your stock will participate in the economics of the sub?
Title: Re: LBTYA - Liberty Global
Post by: Fat Pitch on July 14, 2015, 12:02:54 PM
Looks like index funds might be done dumping LILA/LILAK... We'll know for sure over time.

Some of them were dumped right into my hands. Gotta love spin-off dynamics (or tracking stock dynamics as "we were tutored to know") :)

I still can't believe one of my orders was filled at 41 on friday morning :)

In other news (via Bluegrass Capital), Digicel is filing for IPO in the region:

https://www.sec.gov/Archives/edgar/data/1645826/000119312515236163/d946689df1.htm

Potential target for LILAK? Maybe buying just some assets?

Digicel lost a bid to acquire Columbus that Cable & Wireless won. Malone owns ~11% of CVC. So what do you do if you own a scrappy cable operation that sits next to another system that has the backing of Liberty Global? IPO and hope to get a big equity multiple before you are taken out would be my game plan. Digicel's cost of debt looks really high too ~9%... that puts M&A out of reach especially if your competitor has access to cheaper capital. Malone is playing the scale business.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 14, 2015, 12:10:37 PM
Looks like index funds might be done dumping LILA/LILAK... We'll know for sure over time.

Some of them were dumped right into my hands. Gotta love spin-off dynamics (or tracking stock dynamics as "we were tutored to know") :)

I still can't believe one of my orders was filled at 41 on friday morning :)

In other news (via Bluegrass Capital), Digicel is filing for IPO in the region:

https://www.sec.gov/Archives/edgar/data/1645826/000119312515236163/d946689df1.htm

Potential target for LILAK? Maybe buying just some assets?

Digicel lost a bid to acquire Columbus that Cable & Wireless won. Malone owns ~11% of CVC. So what do you do if you own a scrappy cable operation that sits next to another system that has the backing of Liberty Global? IPO and hope to get a big equity multiple before you are taken out would be my game plan. Digicel's cost of debt looks really high too ~9%... that puts M&A out of reach especially if your competitor has access to cheaper capital. Malone is playing the scale business.

The more I think about it the more I like LILA.
Title: Re: LBTYA - Liberty Global
Post by: Fat Pitch on July 14, 2015, 12:11:57 PM
Posted this in a separate thread but really meant here. To the people who own some of these Liberty tracking stocks: what is it you actually own when you own a tracking stock? Is it a bonafide, no shit, economic interest in a sub, but with no voting rights? Or is it more like a promise that your stock will participate in the economics of the sub?

A tracking stock is merely an economic interest in the performance of what is being tracked. What's being tracked is merely sliced up from the parent's balance sheet but it's still technically part of it. A common use of tracking stocks is to create a currency to speed up acquisitions but still have access to the parent company balance sheet.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 14, 2015, 12:12:44 PM
Posted this in a separate thread but really meant here. To the people who own some of these Liberty tracking stocks: what is it you actually own when you own a tracking stock? Is it a bonafide, no shit, economic interest in a sub, but with no voting rights? Or is it more like a promise that your stock will participate in the economics of the sub?

My understanding is that technically, you're really a shareholder in the parent, Liberty Global. But in practice, you will track the assets of the tracking stock.

Or the lazy way to think about it is, if it's good enough for John Malone, it's good enough for me.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 14, 2015, 12:15:19 PM
Posted this in a separate thread but really meant here. To the people who own some of these Liberty tracking stocks: what is it you actually own when you own a tracking stock? Is it a bonafide, no shit, economic interest in a sub, but with no voting rights? Or is it more like a promise that your stock will participate in the economics of the sub?

A tracking stock is merely an economic interest in the performance of what is being tracked. What's being tracked is merely sliced up from the parent's balance sheet but it's still technically part of it. A common use of tracking stocks is to create a currency to speed up acquisitions but still have access to the parent company balance sheet.

I answered it there, too  ;)

The point of tracking stocks is that they can be the first step towards a real spin-off. This can be really interesting when they aren't quite ready for prime time and you want to keep the two companies' balance sheets together for tax and financial reasons. This is the way John Malone uses tracking stocks, anyway. So, with tracking stocks you can participate in a kind of "pre-spin-off spin-off" but you have to trust management that prime time will come someday. Listen to maestro himself:

https://youtu.be/v5QfCLeloEg?t=1h9m16s
Title: Re: LBTYA - Liberty Global
Post by: Ham Hockers on July 14, 2015, 12:32:22 PM
Posted this in a separate thread but really meant here. To the people who own some of these Liberty tracking stocks: what is it you actually own when you own a tracking stock? Is it a bonafide, no shit, economic interest in a sub, but with no voting rights? Or is it more like a promise that your stock will participate in the economics of the sub?

My understanding is that technically, you're really a shareholder in the parent, Liberty Global. But in practice, you will track the assets of the tracking stock.

Or the lazy way to think about it is, if it's good enough for John Malone, it's good enough for me.

So it's sort of a separation in an accounting presentation sense, but not really a true legal/structural separation. And presumably, your blow up risk is still to the entire consolidated parent?
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 14, 2015, 10:46:14 PM
Posted this in a separate thread but really meant here. To the people who own some of these Liberty tracking stocks: what is it you actually own when you own a tracking stock? Is it a bonafide, no shit, economic interest in a sub, but with no voting rights? Or is it more like a promise that your stock will participate in the economics of the sub?

My understanding is that technically, you're really a shareholder in the parent, Liberty Global. But in practice, you will track the assets of the tracking stock.

Or the lazy way to think about it is, if it's good enough for John Malone, it's good enough for me.

So it's sort of a separation in an accounting presentation sense, but not really a true legal/structural separation. And presumably, your blow up risk is still to the entire consolidated parent?

Yes, the blow-up risk but also the financial firepower.
Title: Re: LBTYA - Liberty Global
Post by: Ham Hockers on July 15, 2015, 05:09:54 AM
Posted this in a separate thread but really meant here. To the people who own some of these Liberty tracking stocks: what is it you actually own when you own a tracking stock? Is it a bonafide, no shit, economic interest in a sub, but with no voting rights? Or is it more like a promise that your stock will participate in the economics of the sub?

My understanding is that technically, you're really a shareholder in the parent, Liberty Global. But in practice, you will track the assets of the tracking stock.

Or the lazy way to think about it is, if it's good enough for John Malone, it's good enough for me.

So it's sort of a separation in an accounting presentation sense, but not really a true legal/structural separation. And presumably, your blow up risk is still to the entire consolidated parent?

Yes, the blow-up risk but also the financial firepower.

How so? I can see how you'd get the benefit of extra security (and related, more borrowing capacity?) but in a non-blowup scenario, aren't you only promised the economics of the specific subs that you're tracking?
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 15, 2015, 05:17:26 AM
Yes, the blow-up risk but also the financial firepower.

How so? I can see how you'd get the benefit of extra security (and related, more borrowing capacity?) but in a non-blowup scenario, aren't you only promised the economics of the specific subs that you're tracking?

LiLAC will benefit from Global's balance sheet to reduce its borrowing costs, can leverage its scale to negotiate on content deals, use its technology (Horizon boxes), etc. It's still paying Global something for some services, but as a standalone it wouldn't have access to nearly what it does by being part of Global.
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on July 15, 2015, 06:59:59 AM
Yes, the blow-up risk but also the financial firepower.

How so? I can see how you'd get the benefit of extra security (and related, more borrowing capacity?) but in a non-blowup scenario, aren't you only promised the economics of the specific subs that you're tracking?

LiLAC will benefit from Global's balance sheet to reduce its borrowing costs, can leverage its scale to negotiate on content deals, use its technology (Horizon boxes), etc. It's still paying Global something for some services, but as a standalone it wouldn't have access to nearly what it does by being part of Global.

This is a bet on John Malone being the benevolent dictator and being as rational as he has always been. No point thinking of voting rights as JM controls everything anyway. If there is a risk of this blowing up, I am sure he would consolidate it back to take advantage of tax benefits :). Tracking stock makes sense here as Liberty mentioned it gives LILA more ability to borrow at lower rates. JM has done this in US with TCI, in Europe with LBTYA. I don't see why he would fail in Latam.

This was a stock I have been waiting on for a long time. The spin off dynamics are just icing on the cake. Sell Index funds Sell!!
Title: Re: LBTYA - Liberty Global
Post by: fa21212 on July 15, 2015, 07:42:18 AM
If you run the math on this this is seriously overvalued. It's selling at 35x 2016 FCF / share. It's not growing fast enough (they guided to mid to high single digit EBITDA growth, given historical growth rates after they get a one time benefit for synergies I would argue it's on the lower end of this range) to merit that kind of a multiple. Can they do accretive M&A? Yes. But they have to do a ton of it for you to even make reasonable 15% returns. A major headwind to M&A in the sector is the very high debt prices. They're not using debt recourse to Liberty Global Europe as a means of funding Lilac. This arrangement would essentially be a transfer of wealth from LBTYK to LILAK and John Malone is smarter in terms of taking debt risk siloed to individual entities rather than making it recourse to the group. Do the math if your cost of debt is 11% (as is the swapped cost of debt in Chile) and you're buying assets around 8x EBITDA, it's not that accretive. The reason that cable deals in Europe and the US are so accretive is because your cost of debt is more like 5%-6% even for longer dated maturities. Charter was issuing 40 year debt at 6.9% last week to fund the TWC deal. In Chile, you're getting 7 year debt at 11%. There's a massive difference in value created when the delta is that high. When you're paying 35x FCF / share, it's pretty tough for you to make money. Just look at investing in Malone Liberty related entities during the tech boom in 2000 to get a sense of what the long term ramifications are of massively overpaying for assets.
Title: Re: LBTYA - Liberty Global
Post by: loganc on July 15, 2015, 07:59:16 AM
If you run the math on this this is seriously overvalued. It's selling at 35x 2016 FCF / share. It's not growing fast enough (they guided to mid to high single digit EBITDA growth, given historical growth rates after they get a one time benefit for synergies I would argue it's on the lower end of this range) to merit that kind of a multiple. Can they do accretive M&A? Yes. But they have to do a ton of it for you to even make reasonable 15% returns. A major headwind to M&A in the sector is the very high debt prices. They're not using debt recourse to Liberty Global Europe as a means of funding Lilac. This arrangement would essentially be a transfer of wealth from LBTYK to LILAK and John Malone is smarter in terms of taking debt risk siloed to individual entities rather than making it recourse to the group. Do the math if your cost of debt is 11% (as is the swapped cost of debt in Chile) and you're buying assets around 8x EBITDA, it's not that accretive. The reason that cable deals in Europe and the US are so accretive is because your cost of debt is more like 5%-6% even for longer dated maturities. Charter was issuing 40 year debt at 6.9% last week to fund the TWC deal. In Chile, you're getting 7 year debt at 11%. There's a massive difference in value created when the delta is that high. When you're paying 35x FCF / share, it's pretty tough for you to make money. Just look at investing in Malone Liberty related entities during the tech boom in 2000 to get a sense of what the long term ramifications are of massively overpaying for assets.

If LiLAC is massively overvalued, then how do you explain the transaction that was made to purchase the minority 20% of VTR using LBTYK stock at a total equity valuation of 2.1B?  The total LiLAC equity is trading at close to that value presently and the 60% of LCPR is obviously not worth zero.  Do you think LBTYK stock is also massively overvalued?  I am hard pressed to believe that Global mgmt would massively overpay for the minority VTR interest. 

How are you computing maintenance capex when you model FY16 FCF? 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 15, 2015, 08:15:16 AM
If you run the scenario where Lilac does no M&A

What are the chances of that happening?
Title: Re: LBTYA - Liberty Global
Post by: jay21 on July 15, 2015, 08:21:15 AM
Ok - Ebitda doubles in 10yrs. Let's use hypothetical numbers to illustrate at 8x:

Current EBITDA of $1, TEV $8, Debt $5, Equity $3

Future EBITDA of $2, TEV $16, Debt $10, Equity $6

You get no FCF during that period b/c of interest pmts and CapEx etc but equity value doubles and you raise $5 of debt to go to equity, pay for CapEx or do deals. Can still be a good return, no?
Title: Re: LBTYA - Liberty Global
Post by: loganc on July 15, 2015, 09:09:31 AM
Logan, good question. When I spoke with the company about the valuation they paid (it does seem very high in hindsight, but this was due to the massive depreciation of the Chilean peso) they didn't have a good answer as to why it made sense. Obviously the investment hasn't done well so far. It's a fair point though given that they are very smart in terms of transactions that they do. It still doesn't get around the fact that it's trading at 35x FCF / share in 2016 and the valuation is very high. The other thing to keep in mind is a $400mm investment in Liberty Global is peanuts. Doesn't really make that much of a difference to total equity returns if that grows at 5% or 15% given how small the investment is. Liberty Global Europe is trading at a high teens multiple in terms of FCF / share and can grow FCF / share at 20% a year with no M&A. If you run the scenario where Lilac does no M&A you're literally making 5% compounded returns assuming a 15x FCF / share exit. I have maintenance capex running starting off at 19% of sales and getting down to 15-16% over time. I guess my question to you is, if you like the stock a lot, what's the scenario in which you make a lot of money on this? How do you make say 25%-30% compounded returns. I've done sensitivity on a wide variety of M&A scenarios and I'm tough pressed to get to very high return levels given cost of debt in Latin America combined with asset valuations in the region.

Maintenance capex of 19% of sales?  I think that is what the pro forma entity is spending on all capex at this point and the entity is growing.  In any event, if you have capex as a percentage of sales ramping down, then looking at the multiple in 2016 may not be the best way to say whether or not something is overvalued.  I doubt LiLAC generates any free cash flow based straight off of the cash flow statement in 2015, but I wouldn't say it is overvalued because it is trading at an infinite multiple. 

In terms of running scenarios with no M&A, are you modeling equity shrink?  In my view there will be real cash above both growth and maintenance capital spending that could be used to repurchase equity over the next 5 years.  When you talk about getting 20% FCF per share growth from Global Europe, you obviously are assuming the levered equity shrink. 

In terms of the 400MM of LBTYK stock, I agree that it is small relative to the size of the enterprise.  However, I am hard pressed to believe that anyone wants to just burn nearly half a billion dollars. 

Getting 25% to 30% compounded seems high relative to the numbers that I have run, but my numbers without M&A, assuming equity shrink, and no incremental debt can get me closer to something like high teens IRR.  I would imagine that I am assuming higher growth rates and lower maintenance capital spending than you are modeling.  Obviously, there would be upside to my estimates if they could engage in accretive M&A and there would be downside due to currency going against you, etc. 
Title: Re: LBTYA - Liberty Global
Post by: ni-co on July 15, 2015, 09:11:06 AM
Do the math if your cost of debt is 11% (as is the swapped cost of debt in Chile) and you're buying assets around 8x EBITDA, it's not that accretive.

You may rest assured that Malone & Co. did the math on this. If there is a management team out there that does the math it's Liberty's. Do you believe that Malone is paying 6.5% above the 10y Chilean government bond yield? This is just a crazy assumption.

In January 2014, VTR issued 6.875% $1.4 billion of Senior Secured Notes due 2024 (http://www.sec.gov/Archives/edgar/data/1570585/000157058514000102/ex991vtrfinancebvq12014res.htm).

Why would you buy Latin American assets with fully swapped debt?
Title: Re: LBTYA - Liberty Global
Post by: Fat Pitch on July 15, 2015, 11:40:52 AM
Logan, would love to discuss with you more offline. In terms of your questions, with a 5 year levered equity shrink with a 15x FCF / share exit multiple I get to a 5% compounded return at $45. This assumes capex as a % of sales gets to 17% or so. I would argue that if you taken a maintenance FCF number, while you may put get a higher FCF number, you should put a lower multiple on it because it's not growing. I wouldn't pay 15x FCF / share for a no growth maintenance FCF number for Latin American cable assets that have very high debt costs. What's your math on getting a much higher IRR with just a levered equity shrink and no M&A? Are you assuming a very high exit multiple in terms of FCF / share?

You are dealing with a cable company with a tiny asset base. 1 or 2 M&A will change the company significantly. Scale will improve and content costs will drop. The company also has the ability to pass on inflation costs semi annually. The higher interest is just the cost of doing business in a region with above average inflation, but with above average growth. The upside here is the company pivoting into media/content once they obtain a larger subscriber base.

If you read Cable Cowboy you'll realize TCI started off as a cable company with high debt and interest rates. There was plenty of struggle but once the scale kicked it... well you know how the story ended :P
Title: Re: LBTYA - Liberty Global
Post by: loganc on July 15, 2015, 12:02:58 PM
Logan, would love to discuss with you more offline. In terms of your questions, with a 5 year levered equity shrink with a 15x FCF / share exit multiple I get to a 5% compounded return at $45. This assumes capex as a % of sales gets to 17% or so. I would argue that if you taken a maintenance FCF number, while you may put get a higher FCF number, you should put a lower multiple on it because it's not growing. I wouldn't pay 15x FCF / share for a no growth maintenance FCF number for Latin American cable assets that have very high debt costs. What's your math on getting a much higher IRR with just a levered equity shrink and no M&A? Are you assuming a very high exit multiple in terms of FCF / share?

I think your point about exit multiple is fair.  I also believe that the substantial difference between our numbers is likely due to differences in OCF growth rate beyond FY15.  I certainly could be overly optimistic.  Check your DM about offline discussion.
Title: Re: LBTYA - Liberty Global
Post by: Fat Pitch on July 15, 2015, 12:13:50 PM
Fat Pitch, how specifically will 1 or 2 M&A deals change the company. What are your underlying assumptions. Chile's cost of debt is 11%, Megacable / Televise are at 8-9%. Megacable trades at roughly 10x EBITDA. If you purchase an asset at 10x EBITDA with 8% debt, it's not that accretive. What are your assumptions that make you believe that this entity will go from compounding at 5% to 25% through a single deal or two deals?

You just have to go with the words from Mike Fries

There's lots of fragmented cable systems that are adjacent to their current systems. It's very difficult to model potential M&A, but the business model that Malone runs is pretty simple and effective. Just think of these cable systems as factories with low utilization rates. The debt to finance them may be high and the present OCF may look low, but that spare capacity will be used with very little additional capital down the road.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on July 15, 2015, 12:56:22 PM
Chile market has a few cable/broadband providers they could acquire - Entel and GTD.  And then maybe a deal with AMX or Telefonica could get through the regulators?

Puerto Rico market is pretty saturated.
Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on July 15, 2015, 01:37:39 PM
There are synergies on the content side across Latin America for LILA where most of the programming is in Spanish though it is hard to quantify. LILA will try to play the old TCI game in Latam. In the end this is a jockey stock.
Title: Re: LBTYA - Liberty Global
Post by: folivera13 on July 15, 2015, 02:03:00 PM
I like the business as a "start-up" with many potential M&A opportunities as many here also believe.  A couple of interesting observations (maybe they have been mentioned before):

- Searchlight (which owns 40% of Liberty Puerto Rico) was co-founded by Eric Zinterhofer, who is the current Chairman of Charter (Rutledge will become Chairman post merger)

- Programming in Puerto Rico (I'm Puerto Rican) closely resembles domestic US programming, which is why a US operator could extract significant synergies by purchasing Liberty PR.  Malone states this in his mavericks lecture (which is on Youtube).  I don't think you have much programming synergies between PR and other areas in LatAm.

- This brings me to my final point- you have a PE firm that will eventually need to exit and the potential of a US operator (like CHTR) to extract significant synergies in a sale. I think LiLAC could eventually exit PR and put the capital to work elsewhere or they could partner with a US based operator to buy Searchlight's stake.  If CHTR buys the stake- it could lead to CHTR expanding outside of the US down the road.

One more thing: many people seem to think LiLAC will look at Mexico for M&A opportunities.  I spoke with a former Liberty PR executive- he believes Peru, Ecuador, Colombia or Panama are more likely.
Title: Re: LBTYA - Liberty Global
Post by: folivera13 on July 17, 2015, 06:05:45 AM
Liberty Global CEO says investment in Latin America is the next big idea

http://www.bizjournals.com/denver/blog/finance_etc/2015/07/at-the-biennialliberty-global-ceo-says-investment.html
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 17, 2015, 10:59:03 AM
Looks like the indexes truly are done dumping LiLAC, because volumes have gone down and sellers are harder to find. Both the As and the Cs are up around 8% right now.
Title: Re: LBTYA - Liberty Global
Post by: merkhet on July 17, 2015, 12:44:43 PM
Didn't the same thing happen a few days ago?
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 17, 2015, 01:08:03 PM
Didn't the same thing happen a few days ago?

Similar, if not quite as dramatic.
Title: Re: LBTYA - Liberty Global
Post by: innerscorecard on July 17, 2015, 04:20:38 PM
What determines index dumping timing?
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 17, 2015, 04:58:01 PM
What determines index dumping timing?

No idea. You can probably guess something is going on when small LiLAC has close to as much dollar  volume as gigantic LBTYA...

There's probably some game theory involved, nobody wants to be the last to sell because it could be a lower price, so all head for exits fairly quickly, etc.
Title: Re: LBTYA - Liberty Global
Post by: spartansaver on July 23, 2015, 02:58:19 PM
What is the regulation like in LA compared to the US? That always seemed to be the one thing that slowed Malone down. The less regulation the quicker the roll up; the more, the harder it seems.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 31, 2015, 06:00:09 AM
http://www.libertyglobal.com/pdf/press-release/7-31-Liberty-Global-ITV-FINAL.pdf

ITV stake increased to 9.9%.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on July 31, 2015, 09:07:32 AM
How do you guys compare the opportunities and valuation of LILA, LBTYA and other broadband stocks?
Title: Re: LBTYA - Liberty Global
Post by: Fat Pitch on July 31, 2015, 09:56:10 AM
How do you guys compare the opportunities and valuation of LILA, LBTYA and other broadband stocks?

CHTR/LBRDA is a play on the turnaround of TWC. The story is pretty straightforward and you have the chance for vertical integration down the road. You got Malone himself saying this is a long term high teens - low twenties IRR. This appears to pan out if you assume aggressive buybacks or upside from a potential wireless offering.

LILA appears to be the early stages of TCI, but in LatAM. Lots of fragmented cable systems and low penetration of broadband in the region. Also you have the balance sheet of LBTYA backing LILA. The only negative is the inflation rate in the region is brutal at the moment. Management has been able to pass on this cost, but will the gov't step in with price controls? Revenue can grow rapidly, but the owners can end up poorer. If it weren't for the inflation this would be a no brainer.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on August 03, 2015, 08:29:13 AM
How do you guys compare the opportunities and valuation of LILA, LBTYA and other broadband stocks?

CHTR/LBRDA is a play on the turnaround of TWC. The story is pretty straightforward and you have the chance for vertical integration down the road. You got Malone himself saying this is a long term high teens - low twenties IRR. This appears to pan out if you assume aggressive buybacks or upside from a potential wireless offering.

LILA appears to be the early stages of TCI, but in LatAM. Lots of fragmented cable systems and low penetration of broadband in the region. Also you have the balance sheet of LBTYA backing LILA. The only negative is the inflation rate in the region is brutal at the moment. Management has been able to pass on this cost, but will the gov't step in with price controls? Revenue can grow rapidly, but the owners can end up poorer. If it weren't for the inflation this would be a no brainer.

Thank you!
Regarding LILA, what's the purpose of creating this tracking stock? Is the mere purpose to use it as an acquisition currency? How would you assign a valuation to it right now?
Title: Re: LBTYA - Liberty Global
Post by: muscleman on August 03, 2015, 09:17:31 AM
Muscleman - it's the latter (Debt / EBITDA).  The other one (EBITDA / Interest) is the Interest Coverage Ratio. 

Keep in mind as well that it's normally calculated off of Adjusted EBITDA - which adjusts for one off items and writedowns and (often) stock based comp.

From S4 here, it looks like total debt is 2.6 bn for LILA.
http://www.sec.gov/Archives/edgar/data/1570585/000119312514453670/d794201ds4a.htm#rom794201_6

LILA's 9 month loss is 63 m. D&A 158. Interest expense 60 m. Tax benefit 24 m. So 9 month EBITDA for 2014 is 131 m. Normalized to 12 months, it will be 174 m.

Seems like the leverage ratio is 2600 / 174 = 14.9? That seems huge. JM said he usually targets 5x leverage, right?
Title: Re: LBTYA - Liberty Global
Post by: muscleman on August 03, 2015, 10:06:03 AM
http://www.sec.gov/Archives/edgar/data/1570585/000119312514453670/d794201ds4a.htm#rom794201_8

Page 42.
"we generally seek to cause our operating subsidiaries to maintain their debt at levels that result in a consolidated debt balance that is between four and five times our consolidated operating cash flow."

So the leverage ratio is not debt/EBITDA but debt/OCF.  :)
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 04, 2015, 03:45:15 PM
Q2:

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Earnings-Release-Q2-15-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: muscleman on August 11, 2015, 09:29:49 PM
Q2:

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Earnings-Release-Q2-15-FINAL.pdf

Q2 rebased OCF Growth of 4% in Europe

Liberty Global has already reached the 5x leverage ratio. The OCF growth seems low right now. If I buy, how will I expect to get a high return on this investment? Should I expect them to create synergy , cut cost, and increase OCF from there? If OCF remains low growth, I can't see how I can get a high return on this investment.
Thoughts?  :)
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on August 11, 2015, 11:09:42 PM
There's fixed cost leverage on their revenue growth... so their cash flow should grow faster than revenues.

On top of that, there is leverage via debt.

2- They're also working on stuff that may be depressing their earnings right now, like their crappy over-the-top service MyPrime and the Horizon box (which users really, really hate).  Their 50/50 JV with discovery on content should fare a little better.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on August 12, 2015, 08:01:21 AM
There's fixed cost leverage on their revenue growth... so their cash flow should grow faster than revenues.

On top of that, there is leverage via debt.

2- They're also working on stuff that may be depressing their earnings right now, like their crappy over-the-top service MyPrime and the Horizon box (which users really, really hate).  Their 50/50 JV with discovery on content should fare a little better.

Isn't OCF growth the main driver of John Malone's cable business? They maintain 4-5x OCF as the debt level. When OCF increases, they will be able to borrow more money, and use it for acquisition, which increases OCF even more.

At the moment, they already have 5x leverage, and they have only 4% OCF increase, so they can't borrow anymore.

Thoughts?

Another question is:"In terms of our
repurchase activity, we bought nearly $500 million of our equity during Q2, increasing our total to over
$900 million of buybacks during the first six months of the year. As a result, we remain on track to return
$3 billion of capital to shareholders through stock repurchases over the next 18 months."

Why are they buying back stocks at current levels?
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on August 12, 2015, 09:06:58 AM
Wow, I completely misread your original post... reading revenue instead of OCF.

There could be some short-term issues that are affecting OCF... I don't know.  Charter for example had very weak free cash flow for a while as Rutledge is currently in the process of turning it around.  Liberty should report it's revenue growth, which should be a few to several percent a year.

The UK Virgin acquisition was a huge, huge thing for them because Virgin wasn't very well managed.  There's probably huge potential from turning that around.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on September 15, 2015, 09:54:08 AM
http://www.bloomberg.com/news/articles/2015-09-15/malone-says-still-seeking-common-ground-for-liberty-vodafone-m-a
Title: Re: LBTYA - Liberty Global
Post by: Liberty on September 15, 2015, 12:15:36 PM
Mikes Fries and Jeff Bewkes in interview:

http://youtu.be/SY1bkKfUwXs
Title: Re: LBTYA - Liberty Global
Post by: fa21212 on September 15, 2015, 12:44:12 PM
Great video, thanks for posting Liberty!
Title: Re: LBTYA - Liberty Global
Post by: ni-co on September 29, 2015, 07:43:52 AM
Yesterday's non-event was exactly the thing I was hoping for to buy back into LBTYA. Has anything changed in the long-term picture since they were trading at 58? If anything, it has become clear that LBTYA will be able to keep cheapening its financing costs accelerating the flywheel.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on September 29, 2015, 08:00:39 AM
Yesterday's non-event was exactly the thing I was hoping for to buy back into LBTYA. Has anything changed in the long-term picture since they were trading at 58? If anything, it has become clear that LBTYA will be able to keep cheapening its financing costs accelerating the flywheel.

The lack of a Vodafone asset swap deal (for now, they could agree later) is certainly a negative. Vodafone probably needs it more than Liberty Global does, so at least Malone has the leverage.

But I don't think they need it to do well. I think what we're seeing is that this is a hedge fund favorite that gets puked out when the going gets rough and these guys blow up or have to reduce leverage.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on September 29, 2015, 08:22:03 AM
I agree that it's an additional positive probably not going to happen but I can't see how this would affect the operative picture negatively. To me, this is just noise.

There are two fundamental aspects I'm watching:

1. How are interest rates developing? This is a huge FCF driver for a company with such a debt load.

2. Is there anything on the horizon threatening the victory of cable broadband (vs all other possible data routes)?

I think that both aspects keep looking great for all cable cos.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on October 22, 2015, 08:43:29 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone buying Malone?
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on October 22, 2015, 08:51:02 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone buying Malone?

Being in LILA has its privileges. TCI 3.0

Title: Re: LBTYA - Liberty Global
Post by: muscleman on October 22, 2015, 09:33:06 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone buying Malone?

Being in LILA has its privileges. TCI 3.0

No details on this? Are they going to use debt or LILAK stocks to buy it? LILAK stock is so cheap that using the stock may not make sense.
Or are they going to use debt and LBTYK stock to buy it, and fold it into LILA? That makes most sense as LBTYK is much higher valued in EV/EBITDA multiple than LILAK.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on October 22, 2015, 09:33:45 AM
http://www.wsj.com/articles/malones-liberty-global-in-talks-to-buy-cable-wireless-communications-1445528255

Malone buying Malone?

Being in LILA has its privileges. TCI 3.0

No details on this? Are they going to use debt or LILAK stocks to buy it? LILAK stock is so cheap that using the stock may not make sense.
Or are they going to use debt and LBTYK stock to buy it, and fold it into LILA? That makes most sense as LBTYK is much higher valued in EV/EBITDA multiple than LILAK.

No detail because it's not happening yet.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on October 22, 2015, 10:33:37 AM
Doesn't malone own more of CWC than LILA?  If for some reason LILA trades at depressed prices, I think CWC will swoop in and offer to take it over. 
*Assuming that the CWC CEO is ok with losing his job and getting a golden parachute.
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on October 22, 2015, 10:38:48 AM
Quote
Mr. Malone has recused himself from the conversations between Liberty Global and Cable & Wireless as a result, one of the people said.

"Pay no attention to that man behind the curtain"

;)
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 05, 2015, 04:57:09 PM
Q3 is out: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-15-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 21, 2015, 06:22:23 AM
Write-up on Liberty Global by @jnvest:

http://www.jnvestor.com/lbtya/
Title: Re: LBTYA - Liberty Global
Post by: giofranchi on December 21, 2015, 06:34:43 AM
Write-up on Liberty Global by @jnvest:

http://www.jnvestor.com/lbtya/

Thank you! ;)

Cheers,

Gio
Title: Re: LBTYA - Liberty Global
Post by: marazul on December 21, 2015, 06:46:22 AM
Thank you. The author mentioned it, but I think the estimates are WAYYYY too conservative. OCF growth should be higher than 3%, there should be no deleveraging with new debt used for buybacks, FCF should grow as capex intensity decreases, etc.
Title: Re: LBTYA - Liberty Global
Post by: BraveChieftain on December 21, 2015, 08:44:03 AM
I thought the write-up was pretty good but have some issues with some of the math. Agreed EBITDA growth seems a bit low, but that's been covered. My issue is more on the FCF yield. It doesn't look like the author is deducting the LILAK stake from LBTYK's market cap - this means PF FCF yield for LBTYK is higher than the write-up...
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 30, 2015, 07:32:44 PM
http://www.thisismoney.co.uk/money/markets/article-3379214/MARKET-REPORT-Vodafone-said-planning-possible-140bn-merger-listed-cable-company-Liberty-Global-early-2016.html

More merger talks...
Title: Re: LBTYA - Liberty Global
Post by: loganc on January 11, 2016, 03:15:16 PM
Would anyone with access care to DM me a copy of the MS report?  Thanks in advance.
Title: Re: LBTYA - Liberty Global
Post by: meiroy on January 11, 2016, 05:35:30 PM
Would anyone with access care to DM me a copy of the MS report?  Thanks in advance.

[pretentious] executive summary: things are uncertain *shiver* and it already went down a lot so our PT was too high. End.

This is exciting. First time ever I'm considering buying it. Hope it keeps crashing.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on January 13, 2016, 10:01:36 AM
http://www.thisismoney.co.uk/money/markets/article-3379214/MARKET-REPORT-Vodafone-said-planning-possible-140bn-merger-listed-cable-company-Liberty-Global-early-2016.html

More merger talks...

Two questions here.
1. What's your estimated maintanence capex for Liberty Global?
2. Does this Vodafone deal sound similar to the TCI-AT&T merger in 1999? A phone company pays out fat dividends and focuses on EPS while a cable company tries to minimize tax and focuses on long term cash flow. The marriage of TCI-AT&T did not end up well. How will Malone solve that problem here? Vodafone's market cap is 3 times more than Liberty Global. Will this end up to be Vodafone's CEO driving the show? That would not end up well.
Title: Re: LBTYA - Liberty Global
Post by: ni-co on January 13, 2016, 10:46:33 AM
http://www.thisismoney.co.uk/money/markets/article-3379214/MARKET-REPORT-Vodafone-said-planning-possible-140bn-merger-listed-cable-company-Liberty-Global-early-2016.html

More merger talks...

Two questions here.
1. What's your estimated maintanence capex for Liberty Global?
2. Does this Vodafone deal sound similar to the TCI-AT&T merger in 1999? A phone company pays out fat dividends and focuses on EPS while a cable company tries to minimize tax and focuses on long term cash flow. The marriage of TCI-AT&T did not end up well. How will Malone solve that problem here? Vodafone's market cap is 3 times more than Liberty Global. Will this end up to be Vodafone's CEO driving the show? That would not end up well.

1. I don't have an answer for that. In 2014 they spent ~2.7bn on capex and all I know is that it'll be a fraction of that. Think about their business and where they have to spend the money. Most of it is growth capex.

2. I think he will try to take control of the new entity – at least with veto power – exactly because of his AT&T experience. He won't make the same mistake twice. I think VOD/LBTYA is a match made in heaven because it makes all the strategic sense in the world (seamless provision of data access everywhere) and VOD is managed with far too much "tax leakage". A combined entity controlled by Malone and managed for cash flows instead of earnings would be a real beast.
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on January 13, 2016, 10:50:40 AM
If Malone sells LBTYA to VOD without getting control, he'll negotiate very high price and open exit for himself and other shareholders.

Of course, this means that there might be no merger.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on January 13, 2016, 11:20:48 AM
Didn't Malone say in the CNBC Faber interview that VOD's shareholder base (at least according to Colao) is particularly wedded to the idea of dividend.  Wouldn't really work with Malone taking over.
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on January 13, 2016, 11:37:57 AM
Yes, my prediction with ~74% confidence is that merger won't happen.

What I wonder about: Malone should realize this too. So why is he talking to VOD for so long? For fun (and - likely no - profit  ;) )?
Title: Re: LBTYA - Liberty Global
Post by: marazul on January 13, 2016, 12:25:42 PM
At this point, I would prefer if they are left alone. At these prices, if they grow 5% this thing is a HR.
Title: Re: LBTYA - Liberty Global
Post by: merkhet on January 13, 2016, 12:44:45 PM
Yes, my prediction with ~74% confidence is that merger won't happen.

What I wonder about: Malone should realize this too. So why is he talking to VOD for so long? For fun (and - likely no - profit  ;) )?

Because they could still talk about some asset swaps that would be favorable.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on January 13, 2016, 12:58:35 PM
*BING*   ;)

Yes, my prediction with ~74% confidence is that merger won't happen.

What I wonder about: Malone should realize this too. So why is he talking to VOD for so long? For fun (and - likely no - profit  ;) )?

Because they could still talk about some asset swaps that would be favorable.
Title: Re: LBTYA - Liberty Global
Post by: valuefinder0525 on January 13, 2016, 01:14:15 PM
At this point, I would prefer if they are left alone. At these prices, if they grow 5% this thing is a HR.

What are the chances of actually achieving this growth rate?
Title: Re: LBTYA - Liberty Global
Post by: marazul on January 13, 2016, 01:22:31 PM
Fries has mentioned high single digits so I am being "conservative".
Title: Re: LBTYA - Liberty Global
Post by: valuefinder0525 on January 13, 2016, 01:33:35 PM
Fries has mentioned high single digits so I am being "conservative".

Seems to me that he is super promotional. How are we looking on the 1 million organic RGU net adds for 2015?
Title: Re: LBTYA - Liberty Global
Post by: marazul on January 13, 2016, 01:57:32 PM
Agree, he seems promotional and I don´t like that.
Title: Re: LBTYA - Liberty Global
Post by: rpadebet on January 14, 2016, 11:41:51 AM
*BING*   ;)

Yes, my prediction with ~74% confidence is that merger won't happen.

What I wonder about: Malone should realize this too. So why is he talking to VOD for so long? For fun (and - likely no - profit  ;) )?

Because they could still talk about some asset swaps that would be favorable.

Hopefully he finds something interesting to put in the LILA side pocket
Title: Re: LBTYA - Liberty Global
Post by: cmlber on January 15, 2016, 11:42:30 AM
Rapidly approaching a 10% FCF yield on ttm #s...
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on January 15, 2016, 03:10:35 PM
If I was leveraged 5:1 I could probably earn 10% or what, 2% unleveraged? :)

Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on January 15, 2016, 04:24:09 PM
Quote
If I was leveraged 5:1 I could probably earn 10% or what, 2% unleveraged?

Only if your funding cost is 0%.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on January 15, 2016, 06:38:40 PM
Quote
If I was leveraged 5:1 I could probably earn 10% or what, 2% unleveraged?

Only if your funding cost is 0%.

Good point.
Title: Re: LBTYA - Liberty Global
Post by: marazul on January 15, 2016, 06:58:23 PM
it is not levered 5x equity is 5x cash flow which is very different.
Title: Re: LBTYA - Liberty Global
Post by: smathew on January 15, 2016, 06:59:38 PM
leverage is only around 1:1
Title: Re: LBTYA - Liberty Global
Post by: ni-co on January 16, 2016, 04:43:50 AM
I think that the market consensus is completely overestimating the risk of leverage at LBTYA. Cable co cash flows are almost comparable to multi-family REIT cash flows. People won't stop using their broadband access in harder times. I wouldn't be surprised if they even wouldn't cut cords at an increased pace.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on January 23, 2016, 09:02:58 AM
Interview with Mike Fries in Davos:

http://www.bloomberg.com/news/videos/2016-01-22/liberty-global-ceo-more-cable-consolidation-potential
Title: Re: LBTYA - Liberty Global
Post by: cleonard12 on January 28, 2016, 08:13:15 AM
Liberty Global released a preliminary proxy a couple days ago on the CWC deal. I read through and took some notes, found the Background to the Merger to be the most interesting part. Most of the other stuff was covered in prior filings:


Notes on Preliminary Proxy (1.22.2016)

2 reasons for voting:
-   Enable Liberty Global to issue shares for the CWC deal
-   Sign off on Malone’s 13% inside deal
-   Shareholders aren’t actually voting on the deal, they are required to vote because Malone is a director of Global and a >5% owner of the company Global is acquiring

Date of shareholder meeting still TBD

The mechanics of the merger:
1 – UK sanctioned scheme of arrangement
2 – Creation of MegerCo LLC (English) that will be a subsidiary of Global
   CWC assets transferred to this sub

Once complete, Global will attribute this sub to the LiLAC group in exchange for ~67% ownership in LILAC
-   Existing LILAC owners will own ~25% of pro-forma LILAC
-   Remainder are legacy CWC owners

Key Dates:
-   Long Stop date: April 30, 2016
-   Extended stop date (if FCC requires more): November 16, 2016
-   Stated goal is to complete deal in Q2 2016

Break fee: $50mm Global would owe CWC (exclusive of VAT)
-   Seems light for a $5.47B deal
o   .91% of deal value, average is typically 3% - 4% according to: http://www.kirkland.com/siteFiles/Publications/MAUpdate_090612.pdf
-   Takeover code prevents CWC from paying any breakup fee to LBTYK

Combined company:
-   Global operates in 14 countries today, adding 15 through CWC
-   Confirming “low double digit rebased” operating cash flow growth over medium term
-   Not much extra operational detail, they do reference confidence in previously stated CWC-Columbus synergies

Background to Merger:
-   In July 2014 Columbus (Malone’s cable co) started a process to sell itself
-   Liberty Global submitted a non-binding IOI,  but CWC won
-   CWC – Columbus deal closed on March 2015
-   Two months later, May 2015, CWC meets with Global at Englewood, CO offices to discuss industry, possible combination
-   June 2015 Letter from CWC to Global: CWC actually wanted to buy LiLAC, and the idea was Global would take a minority stake in CWC in consideration

-   August 2015 proposal sent by Global: Global buys CWC at 78 pence (24% premium) through:
o   60% LBTYK stock
o   20% LILAC stock (this is disproportionate as LILAC is 1/20th of LBTYK)
o   20% cash
o   CWC rejected this bid

-   September 2015 proposal sent by Global: 84 pence (45% premium)
o   80% LBTYK stock
o   20% cash
o   CWC rejected, they want 87 pence

-   Another proposal was floated with 95% LBTYK and 5% LILAC (this is proportionate)
-   October 22, 2015: market rumors, both sides confirm they are in talks
-   Oct 23, 2015 Global Board meeting: advisors and board come up with the idea that Global would acquire CWC then complete the intergroup transfer to LILAC
-   Final offer was not determined until November

Intergroup: LBTYK -> LILAC
-   There is not any detail or explanation in this proxy on how Global arrived at 67% ownership in LILAC in exchange for the CWC sub

Approvals needed to close deal:
-   Simple majority of LBTYK shareholder on merger/Malone thing
-   75% vote of CWC holders on scheme
o   But 35% of shareholders have already signed up (Malone and other board)
-   Regulatory

Termination:
-   If in writing by both parties
-   Basically if the time lapses, or if another group makes a bid for CWC

Malone’s stake in Global:
-   Economic interest is 2.58%, for a value of ~$750mm
o   Less than LMCA stake, even though Global is far larger company
-   But voting interest is 24.9% through Class B shares
o   B shares have 10x voting power
o   He owns 83% of B shares
-   About 17% of shares are pledged against margin account at Merrill Lynch and Fidelity
o   No LILAC pledged

Fries’ stake in Global:
-   ~$125mm in LBTYK (across all shares), ~$5.7mm in LILAC across all shares
o   40% of his shares are pledged against a margin account at Morgan Stanley
   No LILAC pledged

Irrevocable Undertaking:
-   These are basically voting agreements in the back of the proxy for significant shareholders (Malone’s entity in CWC, Malone in Global, Brendan Paddick, etc.)
-   They are signing that they won’t sell the shares and that they will vote for the deal
-   Global has Malone and Orbis Investment signed on for ~34% of the vote
-   CWC has Malone’s entity, Paddick (former CEO of Columbus) and others for ~35%
Title: Re: LBTYA - Liberty Global
Post by: Liberty on January 28, 2016, 08:24:13 AM
Thanks for sharing your notes, much appreciated!
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on February 02, 2016, 06:31:46 AM
WSJ is reporting VOD and LBTYA are in talks on a Netherlands JV.

http://www.wsj.com/articles/vodafone-in-talks-with-liberty-global-over-joint-venture-in-the-netherlands-1454420732
Title: Re: LBTYA - Liberty Global
Post by: cmlber on February 08, 2016, 10:17:28 AM
Assuming management hit it's guidance for 15', this is at a 9.7% TTM FCF yield with EBITDA growing mid/high single digits and interest expense likely falling.

I know it's leveraged, which the market doesn't seem to like.  But are people in Europe really going to stop using broadband because China is growing slower and oil is cheaper?  And the debt maturities are 7+ years out and fixed.  Also pooled by country, not held at the holdco level.

Anyone buying here?
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on February 08, 2016, 10:37:56 AM
Anyone buying here?

Yes. Bought higher too, so not sure this tells you much. GL. :)
Title: Re: LBTYA - Liberty Global
Post by: ni-co on February 08, 2016, 11:02:06 AM
Assuming management hit it's guidance for 15', this is at a 9.7% TTM FCF yield with EBITDA growing mid/high single digits and interest expense likely falling.

I know it's leveraged, which the market doesn't seem to like.  But are people in Europe really going to stop using broadband because China is growing slower and oil is cheaper?  And the debt maturities are 7+ years out and fixed.  Also pooled by country, not held at the holdco level.

Anyone buying here?

Agree with your analysis. I bought some calls. I'm not willing to put the trigger on the equity yet. But that's caused by my general market view, not by LBTYA. 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 15, 2016, 04:15:36 PM
Globa and Vodafone merging in the Netherlands:

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-and-Vodafone-to-merge-Dutch-operations-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: muscleman on February 15, 2016, 08:00:48 PM
Globa and Vodafone merging in the Netherlands:

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-and-Vodafone-to-merge-Dutch-operations-FINAL.pdf

They didn't say how they come up with the Enterprise value and how much debt the Vodafone sub has.
Let's say they used 8xOCF to come up with the EV of 10.3 Bn for Ziggo, then what multiple did they use for Vodafone?

Is the deal good or bad?
Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on February 15, 2016, 08:31:12 PM
Liberty Global's Dutch business (EV) was valued at 11 times OCF and Vodaphone's was valued at 8 times OCF. So it seems like a reasonable deal for Liberty shareholders.
Title: Re: LBTYA - Liberty Global
Post by: giofranchi on February 16, 2016, 04:40:04 AM
Liberty Global's Dutch business (EV) was valued at 11 times OCF and Vodaphone's was valued at 8 times OCF. So it seems like a reasonable deal for Liberty shareholders.

Thank you. I also think it should turn out to be a good deal.

Cheers,

Gio
Title: Re: LBTYA - Liberty Global
Post by: muscleman on February 16, 2016, 08:38:37 AM
Assuming management hit it's guidance for 15', this is at a 9.7% TTM FCF yield with EBITDA growing mid/high single digits and interest expense likely falling.

I know it's leveraged, which the market doesn't seem to like.  But are people in Europe really going to stop using broadband because China is growing slower and oil is cheaper?  And the debt maturities are 7+ years out and fixed.  Also pooled by country, not held at the holdco level.

Anyone buying here?

EBITDA for 2015 is around $8bn, so the EV/EBITDA multiple is around 8.7. Is that cheap enough to buy? The EV consists of Equity of 27 BN and Long term debt of 45 bn, so 6% EBITDA growth would translate into about 15% equity value growth, assuming no buybacks. I think 15% growth is lower than my bar.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 16, 2016, 08:40:56 AM
Why do you assume no buybacks? They did $2.3bn of buybacks in the past 12 months, and with the 1bn of cash that they'll receive from VOD, they can possibly accelerate that further at the current depressed prices. They've guided to 4bn of buybacks by year-end 2017.
Title: Re: LBTYA - Liberty Global
Post by: prevalou on February 16, 2016, 08:44:29 AM
Assuming management hit it's guidance for 15', this is at a 9.7% TTM FCF yield with EBITDA growing mid/high single digits and interest expense likely falling.

I know it's leveraged, which the market doesn't seem to like.  But are people in Europe really going to stop using broadband because China is growing slower and oil is cheaper?  And the debt maturities are 7+ years out and fixed.  Also pooled by country, not held at the holdco level.

Anyone buying here?

EBITDA for 2015 is around $8bn, so the EV/EBITDA multiple is around 8.7. Is that cheap enough to buy? The EV consists of Equity of 27 BN and Long term debt of 45 bn, so 6% EBITDA growth would translate into about 15% equity value growth, assuming no buybacks. I think 15% growth is lower than my bar.

Don't forget a  $5.9 B tax asset
Title: Re: LBTYA - Liberty Global
Post by: muscleman on March 01, 2016, 08:21:32 PM
https://www.sec.gov/Archives/edgar/data/1570585/000157058516000395/lg201510-k.htm
"United Kingdom and Ireland. In the U.K., we have a number of significant competitors in the market for broadband internet services. Of these broadband internet providers, BT is the largest, serving 34% of the total market in the U.K. Virgin Media serves 20% of the total broadband market in the U.K. BT provides broadband internet access services over its own, VDSL network, which is available to approximately 85% of the U.K. population. BT Openreach, a division of BT, manages BT’s local access network and provides competitors access to BT’s networks. BT has announced its intention to rollout ultrafast speeds of up to 300 Mbps to 500 Mbps by the end of 2020 to up to 10.0 million premises using G-fast technology, a DSL standard designed for local loops less than 250 meters. This technology is also expected to eventually support a rollout of 1 Gbps service."

Really? I didn't expect DSLs to provide this kind of speed. In this case, what's the competitive advantage of cable vs fixed line telephony?  :o
Title: Re: LBTYA - Liberty Global
Post by: smathew on March 01, 2016, 08:43:45 PM
" DSL standard designed for local loops less than 250 meters" . That means they need to run fiber  very near
to home (to uplink this connection) and they cannot reuse the existing local loop fully as it is (from central office to home).
This should very costly like Fiber to home.


Title: Re: LBTYA - Liberty Global
Post by: muscleman on March 05, 2016, 09:20:49 AM
I agree that with the tax asset and the equity values of LILA and other equities, and share buybacks, the expected annual return can be 20% from here to 2018.
I think I previously missed these calculations.
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on March 10, 2016, 01:16:50 PM
if I model out 7% EBITDA growth, 50% of EBITDA as capex (half growth half maintenance), 6.5% interest, and maintain the 5x leverage....and use all the free cash to buyback stock, 13x exit on run-rate earnings (normalized capex)...then I'm getting about a 25%+ CAGR next 4 years or so.  I think normalized run-rate capex is typically 12-15% of revenue, they're much higher in the investment cycle now obviously, around 25%.

at ~$35, the stock seems to be trading at a 10x run-rate multiple of normalized earnings.  I'm not counting NOLs, that's just gravy...anyone else think that's too high or low?
Title: Re: LBTYA - Liberty Global
Post by: BraveChieftain on March 10, 2016, 02:59:59 PM
You're too low on CapEx as a % of revenue and too high on interest rate for next few years
Title: Re: LBTYA - Liberty Global
Post by: marazul on March 10, 2016, 04:03:35 PM
Capex right now is around 25% of revenues. Think they should approach 15% over time (3 years maybe). Interest rate should be 5% or a bit under that. If EBITDA grows at 7%, leverage remains at 5x and they manage to reduce capital intensity to the mid-teens over the medium term, this is a HR IMO. Double in 3 years seems very likely. We are assuming many things here though.
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on March 10, 2016, 08:10:28 PM
You're too low on CapEx as a % of revenue and too high on interest rate for next few years

Thanks.

I know Im high on interest rate on purpose...I think they're at weighted average of <5.00% for Global but since they will keep issuing debt to maintain the 5.0x net leverage, who knows what rates they get tomorrow.  I threw in 6.5% to be conservative.  Maybe you're right on capex as % of revenue if you count capital leases.  On a run-rate basis however, I think 12-15% is probably the right number.  That's higher than where Comcast's cable business is, and these guys are slightly larger than Comcast on the cable side. The one thing I worry about is ongoing Euro depreciation, which may affect Belgium, Germany, Netherlands etc, and maybe one should haircut the run-rate EBITDA, but its not a huge concern

I just bought today at around the bottom tick, and wondering if I should take a slug of Lilak too. Is Lilak potentially a better story after cable and wireless closes?

Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on March 11, 2016, 08:28:20 AM
Shooter

Can you explain how you get to 25% expected return based on your assumptions? Thanks
Title: Re: LBTYA - Liberty Global
Post by: muscleman on March 11, 2016, 10:27:29 AM
Does anyone know the economics of the MVNO business? I went through this conference call here and they said MVNO is capital light and you can do incremental roll out.
http://edge.media-server.com/m/p/ppxq5y6j

Usually how are the MVNO contracts constructed? Where can I see some financials of some of these MVNOs?
In the US there are a number of these, like H2O wireless and Chricket. They are cheaper than the big four. But they are not public companies.
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on March 11, 2016, 02:57:39 PM
Shooter

Can you explain how you get to 25% expected return based on your assumptions? Thanks

hey I've attached a quick and dirty spreadsheet.  I threw in some color coding for you to make it a little clearer.

hope that helps.  Let me know if you agree or disagree with anything here.

Thanks.
Title: Re: LBTYA - Liberty Global
Post by: ItsAValueTrap on March 12, 2016, 08:59:45 AM
Does anyone know the economics of the MVNO business? I went through this conference call here and they said MVNO is capital light and you can do incremental roll out.
http://edge.media-server.com/m/p/ppxq5y6j

Usually how are the MVNO contracts constructed? Where can I see some financials of some of these MVNOs?
In the US there are a number of these, like H2O wireless and Chricket. They are cheaper than the big four. But they are not public companies.

I assume MVNO is a commodity business since it is not that difficult to enter that business?  (*It will vary depending on the regulatory environment in a particular country.) But if the spectrum and network owners are renting out their infrastructure, than the MVNOs are mostly buying a commodity and reselling+repackaging it.  Obviously they have to be good at marketing and providing customer service.

For cable companies, the MVNO business can be attractive to them since they already own infrastructure- a Wifi network.  They can try to get their customers to use their Wifi router, which greatly expands their Wifi network.  They can also add Wifi hotspots to their existing data network.
Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on March 12, 2016, 09:34:50 AM
Shooter

Thanks for posting the spreadsheet. I have a few questions/comments on the model:

1. When you calculate the tax, you seem to subtract the capex from Adj. EBITDA. It seems to me that you need to subtract depreciation, not capex to calculate taxes. This will reduce the FCF.

2. EBITDA growth rate of 7.5% may be optimistic, especially if measured in USD.

3. Sustaining capex of 25% of EBITDA may be too low given that technology needs to be constantly updated. 35-40% of EBITDA seems more realistic to me.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on March 12, 2016, 05:59:35 PM
Shooter

Thanks for posting the spreadsheet. I have a few questions/comments on the model:

1. When you calculate the tax, you seem to subtract the capex from Adj. EBITDA. It seems to me that you need to subtract depreciation, not capex to calculate taxes. This will reduce the FCF.

2. EBITDA growth rate of 7.5% may be optimistic, especially if measured in USD.

3. Sustaining capex of 25% of EBITDA may be too low given that technology needs to be constantly updated. 35-40% of EBITDA seems more realistic to me.

It should be EBITDA minus interest, tax and maintenance capex, for these kinds of "real estate" companies.
Regarding capex, it really depends on what you have to spend to fend off your DSL competitors. DSL's top internet speed has a bottleneck. I think they just need to upgrade to a speed a lot more than that to stay competitive. There is no need to keep increasing your speed every year.

EBITDA growth is guided at 7-9%, on rebased terms, which assumes constant currency rate. If you are uncomfortable with it, you can hedge the currency.
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on March 12, 2016, 06:38:24 PM
muscleman and munger_disciple,

Thank you. yes you're right.  I caught that but I was lazy. It should be taxed at maintenance depreciation.  Even so, it barely moves the needle.  the other offset is that I didn't count ~6.0B of NOLs.

on Adj. EBITDA, I agree with muscleman on these points, although f/x is more the concern for me.  They guided to high single digits for the next few years.  They're adding households in the UK and they're still under-penetrated in broadband (most jurisdictions) vs. the US.  And yet, Charter is still growing 7-9% within its own current footprint.  Cablevision was at $450 Adj. EBITDA per homes passed before Tom Rutledge left and the bigger cable companies in the US are around $330+ adj. EBITDA, so that's sort of a rough, (keyword rough) goal of what's possible in my mind.

Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on March 13, 2016, 10:36:01 AM
I agree that Liberty Global is unlikely to pay significant taxes for a long time due to depreciation and and NOLs.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on March 13, 2016, 10:44:37 AM
Does anyone know the economics of the MVNO business? I went through this conference call here and they said MVNO is capital light and you can do incremental roll out.
http://edge.media-server.com/m/p/ppxq5y6j

Usually how are the MVNO contracts constructed? Where can I see some financials of some of these MVNOs?
In the US there are a number of these, like H2O wireless and Chricket. They are cheaper than the big four. But they are not public companies.

I assume MVNO is a commodity business since it is not that difficult to enter that business?  (*It will vary depending on the regulatory environment in a particular country.) But if the spectrum and network owners are renting out their infrastructure, than the MVNOs are mostly buying a commodity and reselling+repackaging it.  Obviously they have to be good at marketing and providing customer service.

For cable companies, the MVNO business can be attractive to them since they already own infrastructure- a Wifi network.  They can try to get their customers to use their Wifi router, which greatly expands their Wifi network.  They can also add Wifi hotspots to their existing data network.

The main benefit of a MVNO is reducing churn via triple and quad play. If you can get churn down, it can be very profitable to run a MVNO, and it also gives you a foot in the door if you ever decide to own your own wireless infrastructure.
Title: Re: LBTYA - Liberty Global
Post by: Aman1 on March 14, 2016, 05:48:20 AM
Does anyone know the economics of the MVNO business? I went through this conference call here and they said MVNO is capital light and you can do incremental roll out.
http://edge.media-server.com/m/p/ppxq5y6j

Usually how are the MVNO contracts constructed? Where can I see some financials of some of these MVNOs?
In the US there are a number of these, like H2O wireless and Chricket. They are cheaper than the big four. But they are not public companies.

Telenet is the most successful mobile-cable operator in Europe that has used MVNO. This was something launched a few years ago under a different management team before Liberty Global assumed control (and back before Malone's big u-turn on mobile assets).

An interesting way to look at MVNO economics is to analyse it from the reverse angle and take a look at Telenet's reasons for buying Base (MNO) from KPN and forgoing the existing MVNO relationship with Mobistar in Belgium.

I've attached Telenet's presentation which runs through the logic and syngeries of the deal. While the launch into MVNO was pre-Malone, by the time of the acqusition this was a Malone / LG entity, so the presentation should be able to provide some insight into how the group now thinks of mobile.

Agree with many of the earlier points - the main goal from LG has been churn reduction - a lot of value in this when you can target your acquisition dollars on gross adds and need not worry about churn leaving you standing still in terms of net adds. Single play has high teens churn, triple play high single digit churn, and quad play has mid single digit churn - so enormous value in any kind of MVNO offering even if the mobile product breaks even.

However, as mobile subs are added and market share grows, the unit economics of MVNO become poor as you fail to gain operating leverage from scale, at which point ownership of a network (or large capacity wholesale deal) becomes more valuable due to the profitability from the product itself. This is what happened in Belgium with Telenet.

The other issue is pricing of MVNO and was partially flagged earlier by comments on regulation and competition. Recent consolidation deals in Europe (Austria, Germany, Ireland) have provided generous terms to MVNO operators for the next 5-6 years. The danger will obviously be what happens when these deals come up for renewal in future and there is not as much pressure on the network provider to offer generous terms, in which case selective acquisition in markets with large cable footprints might make more longer-term strategic sense.

Title: Re: LBTYA - Liberty Global
Post by: jay21 on March 14, 2016, 05:57:29 AM
Given the capital requirements of wireless, at what point do you start to earn reasonable returns? Has any company gotten to that point yet (if so, please share because I would like to learn more)?

MVNO let's you gain a customer relationship without putting up the capital to build our own network. Each side of that coin has costs and benefits.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on March 14, 2016, 09:08:25 AM
Given the capital requirements of wireless, at what point do you start to earn reasonable returns? Has any company gotten to that point yet (if so, please share because I would like to learn more)?

MVNO let's you gain a customer relationship without putting up the capital to build our own network. Each side of that coin has costs and benefits.

Yeah. Wireless companies have far higher capex requirements than cable cos. The only trouble with MVNO is that once your cheap contracts expire, you may have to pay a high price to renew.  ::)
Title: Re: LBTYA - Liberty Global
Post by: Aman1 on March 14, 2016, 02:09:30 PM
Given the capital requirements of wireless, at what point do you start to earn reasonable returns? Has any company gotten to that point yet (if so, please share because I would like to learn more)?

MVNO let's you gain a customer relationship without putting up the capital to build our own network. Each side of that coin has costs and benefits.

Do you mean for a greenfield wireless business? Or for a cable company? For cable, my Telenet example is a good one - they have 7% market share, are buying a network with c.15% market share and see sizeable synergies from the deal.

In terms of greenfield wireless buildout in Europe (which is probably representative of most countries), a good rule of thumb to get a sense of operating leverage is that the EBITDA margins roughly equal the market share in the teens, then as market share goes over 20%, EBITDA margins will go to 30%+.

I'm surprised about the capex comments - it's far more capital intensive to build out a cable network (or fiber) than wireless? Cable steady state run-rate is probably high teens % of sales (set top boxes is a big part of this, often called "success based" growth capex but seems something of a fallacy in my opinion) while mobile can run at low double digit % of sales?

Title: Re: LBTYA - Liberty Global
Post by: muscleman on March 23, 2016, 08:45:28 PM
https://www.sec.gov/Archives/edgar/data/1570585/000157058516000499/a03-23x168xkexhibit991pubo.htm
The timelines are very tight. Unlikely CHTR-TWC merger, this one seems fast. Why is there such a difference?
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 09, 2016, 03:04:26 PM
Q1 results are out (also for LiLAC):

http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q1-16-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: muscleman on May 11, 2016, 09:05:07 AM
Q1 results are out (also for LiLAC):

http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q1-16-FINAL.pdf


According to them, this is the best  Q1 ever in UK. But how come the triple play percentage is dropping and double play is increasing?
Also, the wireless results are not that great.
https://www.sec.gov/Archives/edgar/data/1570585/000157058516000642/ex991fixedincomeq12016repo.htm
Page 3.


Page 10:
Net adds of video and internet are also both weaker than last Q1 in Germany. Their explanation is higher prices.



I am a bit upset that Mike is so promotional.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on May 16, 2016, 07:50:18 AM
Please let me know if I am wrong here.

http://www.stockopedia.com/ratios/cash-return-on-invested-capital-last-year-189/.

Cash Return On Invested Capital (CROIC or CROCI) measures how much cash a company cgenerate based on each dollar it invests into its operations. It is similar to ROIC but focuses on cash, rather than profits. CROIC = Free Cash Flow divided by Invested Capital.

Invested Capital in turn is calculated as Total Equity + Total Liabilities - Current Liabilities - Excess Cash (using the Greenblatt definition of Excess Cash as cash at hand in excess of 5% of revenues).

LBYTK is going to generate $2 bn cash. Its invested capital is over $56 bn, so the CROIC is just 3.4%?
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on May 16, 2016, 01:12:53 PM
LBYTK is going to generate $2 bn cash. Its invested capital is over $56 bn, so the CROIC is just 3.4%?

That looks correct. Whether it's a meaningful ratio in case of LBTYA is not clear. Don't expect tons of FCF from this company. People probably value this based on EBITDA... Though I agree that with EV or IC in the ratios, this won't look cheap.
Title: Re: LBTYA - Liberty Global
Post by: marazul on May 16, 2016, 01:35:09 PM
They will generate $2bn if FCF this year, generated $2.5bn last year. FCF is depressed because they have been expanding their network (passings). This should yield high single digit revenue growth in the following years. If they wanted to eliminate growth capex (which would be unwise), they might be able to generate $3.5bn + in FCF all things equal.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 16, 2016, 01:50:17 PM
If you believe management that they're getting IRRs in the 30%+ range on the new builds that they're doing (project lightning in UK, etc), you want them to spend that money on growth capex rather than see it end up as FCF...

They also did many acquisitions in the past few years that have restructuring charges and synergies still going through the pipe, so that impacts things.

They've been blocked from doing as much buybacks as they want recently because of the CWC deal. The moratorium ends on May 18. That might have an impact on price, we'll see.
Title: Re: LBTYA - Liberty Global
Post by: marazul on May 25, 2016, 07:06:38 PM
Some comments on LBTYA https://www.dropbox.com/s/7bn5uyhzv4si5zh/Liberty%20Global%20Investment%20Thesis.pdf?dl=0
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on June 02, 2016, 06:51:47 AM
Lilac distribution announced, as expected.

http://finance.yahoo.com/news/liberty-global-announces-distribution-lilac-134700391.html
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 02, 2016, 07:54:35 PM
Lilac distribution announced, as expected.

http://finance.yahoo.com/news/liberty-global-announces-distribution-lilac-134700391.html

All at once, no playing around!
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 06, 2016, 06:09:56 AM
Reuters piece on a potential VOD-LBTYA deal, and how O2 being back in play could catalyze things:

http://www.reuters.com/article/us-britain-telecoms-malone-idUSKCN0YS0LI
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 21, 2016, 05:44:50 AM
http://www.businesswire.com/news/home/20160620005993/en/Liberty-Global-Announces-Final-Ratio-LiLAC-Group

LILA distribution ratio has been announced, 8.01482.
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on June 21, 2016, 08:19:38 AM
And both LBTYA and LILA down today. Maybe opportunity if someone wants to add.
Title: Re: LBTYA - Liberty Global
Post by: namo on June 21, 2016, 02:03:59 PM
LBTYA/LBTYK are actually up; they are trading ex-distribution of LILA/LILAK now.

Mr Market seems to have a clear preference for the former.
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on June 21, 2016, 02:15:41 PM
Depends on which prices you use.

For each LBTYA you got ~0.125 LILA today. This is ~4.35. If you use most of today's LBTYA prices vs most yesterday's prices, it's a wash. If you look at today's lows, LBTYA was cheaper today, if you look at the highs, it was cheaper yesterday.

But yeah, LILA dropped more.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on June 22, 2016, 08:08:46 AM
Have Malone or Maffei commented on Brazil mobile or fixed broadband/cable market before?  Noticed that Oi is in bankruptcy and recession in Brazil could present opportunities.  Seems like Telefonica, DTV and AMX have the largest systems in Brazil.  Wonder if Telefonica is having second thoughts on GVT?
Title: Re: LBTYA - Liberty Global
Post by: undervalued on June 22, 2016, 10:53:00 AM
Looking at the latest 5/9 10Q, current assets vs current liabilities is 3.5b vs 10.1b. Why is this not a concern to investors?
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on June 22, 2016, 10:58:30 AM
I think the regulatory framework in non-US markets can add a constant but grinding friction to results. This is not to say they will not make money but that there will be opposing forces that are somewhat stronger than in US cable, this might be reflected in higher debt required to service customer "improvements" similar to the airline industry that are a net positive to consumers but may not be so hot for operators.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on June 24, 2016, 06:18:33 AM
Off more than 10% on Brexit. Fries has said additional capex in UK Virgin Media was predicated on EU.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on June 24, 2016, 09:27:34 AM
Off more than 10% on Brexit. Fries has said additional capex in UK Virgin Media was predicated on EU.

What's the brexit impact on Liberty Global? Virgin Media seems to be Liberty's primary growth driver. What will happen now?  ::)
Title: Re: LBTYA - Liberty Global
Post by: cmlber on June 24, 2016, 09:33:02 AM
Off more than 10% on Brexit. Fries has said additional capex in UK Virgin Media was predicated on EU.

What's the brexit impact on Liberty Global? Virgin Media seems to be Liberty's primary growth driver. What will happen now?  ::)

People will still need internet.  I think the business effect will be negligible long-term.  There's definitely a currency effect though.  If the pound eventually declines by 20% like Soros suggested, Virgin Media is worth 20% less to US investors... 
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on June 24, 2016, 01:17:21 PM
See this article - http://seekingalpha.com/article/3348995-a-british-cable-behemoth-worthy-of-your-watch-list
I'm not sure about his graph. He shows FCFF at about 4-5 billion which seems to include deduction for interest expense (2.5 billion). But if you look up the definition of FCFF it excludes interest expense. And when I look at Liberty's presentations it appears the 4-5 billion is before debt servicing cost. So not sure if we're yielding 10% or 20% at the current price.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 28, 2016, 10:11:44 AM
http://www.multichannel.com/news/cable-operators/fries-brexit-won-t-impact-liberty-global-vodafone-jv/405992

Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 23, 2016, 07:49:07 PM
Good write-up for those with VIC access:

https://www.valueinvestorsclub.com/idea/LIBERTY_GLOBAL_PLC_GLOBAL_GP/138589
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 29, 2016, 12:50:24 PM
http://www.reuters.com/article/us-vodafone-group-m-a-liberty-global-eu-idUSKCN10921A

Quote
U.S. cable group Liberty Global and UK telecoms firm Vodafone are set to win EU antitrust approval for their plan to merge their Dutch operations after offering minor concessions, two people familiar with the matter said on Friday. [...] The merged company will be the second-largest telecoms company in the Netherlands. Liberty's Ziggo is the largest cable TV operator in the country, while Vodafone is the second-biggest mobile network operator.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on July 29, 2016, 07:32:43 PM
http://www.reuters.com/article/us-vodafone-group-m-a-liberty-global-eu-idUSKCN10921A

Quote
U.S. cable group Liberty Global and UK telecoms firm Vodafone are set to win EU antitrust approval for their plan to merge their Dutch operations after offering minor concessions, two people familiar with the matter said on Friday. [...] The merged company will be the second-largest telecoms company in the Netherlands. Liberty's Ziggo is the largest cable TV operator in the country, while Vodafone is the second-biggest mobile network operator.


I find it unusual that the EU regulators approve things much faster than the US regulator.
Compare the timeline for CHTR, TWC merger, with this one, and with CWC and Liberty Global.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on July 30, 2016, 10:35:33 AM
http://www.reuters.com/article/us-vodafone-group-m-a-liberty-global-eu-idUSKCN10921A

Quote
U.S. cable group Liberty Global and UK telecoms firm Vodafone are set to win EU antitrust approval for their plan to merge their Dutch operations after offering minor concessions, two people familiar with the matter said on Friday. [...] The merged company will be the second-largest telecoms company in the Netherlands. Liberty's Ziggo is the largest cable TV operator in the country, while Vodafone is the second-biggest mobile network operator.


I find it unusual that the EU regulators approve things much faster than the US regulator.
Compare the timeline for CHTR, TWC merger, with this one, and with CWC and Liberty Global.

Regulatory environment for cable is actually much better in Europe than in the USA.
Title: Re: LBTYA - Liberty Global
Post by: undervalued on August 01, 2016, 10:55:48 AM
Liberty, could you upload the VIC write up here please? You can use Chrome and it will let you print and save it as PDF file. Thank you.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 01, 2016, 12:09:02 PM
Liberty, could you upload the VIC write up here please? You can use Chrome and it will let you print and save it as PDF file. Thank you.

I don't want to do something that might be against the terms of use of my VIC account. (check your PMs, though)
Title: Re: LBTYA - Liberty Global
Post by: Aman1 on August 02, 2016, 02:29:05 AM

Regulatory environment for cable is actually much better in Europe than in the USA.

... because US cable is a regional monopoly while in Europe it's an infrastructure operator competing with national incumbents (and often fiber overbuilders such as in Portugal, Scandinavia).
Title: Re: LBTYA - Liberty Global
Post by: Aman1 on August 02, 2016, 02:39:02 AM
Off more than 10% on Brexit. Fries has said additional capex in UK Virgin Media was predicated on EU.

I'm quite sure this is incorrect.

I've met with the company post-Brexit and they have confirmed that the Virgin buildout ("Project Lightning") that takes UK footprint from 50% of households to 70% of households through 2020 is still going ahead. They claim they are expecting 20% unlevered IRR on this rollout so it's a no-brainer. The EU decision has no obvious impact on this.

The UK government is pushing the incumbent operator, BT, to roll out more fiber across the country (specifically pushing for more FTTH over the current FTTC rollout) and having Virgin and other operators (such as Cityfibre, a small fiber network that is running a trial FTTH rollout with broadband providers Sky and Talk Talk) push BT with their own rollouts of high speed broadband, will in turn stand these companies (such as Virgin) in good stead with the regulator when something is needed down the road.

So in a nutshell, Project Lightning makes financial and political / regulatory sense.

IMHO - Liberty Global has sold off due to:

1) The general hit that all leveraged names have taken (Altice, "safer" specialty pharma, hospital operators and care homes, other Liberty names)

2) The likelihood that a deal with Vodafone in the short term is now unlikely post Netherlands deal (I think both parties will take a "wait and see" approach and see how NL plays out over the next 18-36 months)

3) The broader LG transition from exciting growth story to mature, low growth business (which has happened over the past 3 quarters)
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 03, 2016, 12:33:44 PM
EU approval for the Netherlands JV:

http://www.bloomberg.com/news/articles/2016-08-03/vodafone-gets-eu-approval-for-dutch-deal-on-network-sale-offer-ireyw3cp
Title: Re: LBTYA - Liberty Global
Post by: marazul on August 03, 2016, 12:57:11 PM
This might prove to be a big deal. LGI is dilluting its most troubled market (Netherlands). They will receive approximately 2.5 bn Euro (1bn payment from Vodafone to adjust for valuation differential and 1.5bn from releveraging to 4.5x). Besides, Ziggo should become a stronger player as they now offer a full quad play. This should help reduce churn and mitigate some of the losses experienced past few Qs. Finally, I think if the JV is a success, it will push Vodafone to go for the jugular and take out LBTYA at a premium.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 04, 2016, 06:09:28 AM
I think that's a likely scenario. Also nice to get this cash at a time when the stock is low (buybacks).
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 04, 2016, 03:01:05 PM
Q2: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q2-16-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: muscleman on August 05, 2016, 08:44:29 AM
Q2: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q2-16-FINAL.pdf

Growth seems subpar. They said they expected acceleration in the second half of the year. Let's see if that happens.  ::)
Title: Re: LBTYA - Liberty Global
Post by: cmlber on August 05, 2016, 09:04:15 AM
Q2: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q2-16-FINAL.pdf

Growth seems subpar. They said they expected acceleration in the second half of the year. Let's see if that happens.  ::)

On the plus side, looks like they bought back more than 1% of the company in the week following Brexit...
Title: Re: LBTYA - Liberty Global
Post by: muscleman on August 05, 2016, 09:33:10 PM
Q2: http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q2-16-FINAL.pdf

Growth seems subpar. They said they expected acceleration in the second half of the year. Let's see if that happens.  ::)

On the plus side, looks like they bought back more than 1% of the company in the week following Brexit...

They used to file a report everyday on how much stock they repurchased. Since CWC acquisition they no longer did that, so I thought they stopped repurchasing.
I think if they became a no growth stock, then repurchasing helps to return 8-10% a year to shareholders. If they can grow at 5% a year OCF, the shareholder return would be better.

Regarding LILAC, I remember they used to say without CWC, the growth of OCF would be 5-7% but with CWC, the growth would be in the low double digits.
Now they are saying LiLAC Group 2016 rebased OCF guidance, now including CWC: remains 5-7%?  ::)
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 06, 2016, 07:18:13 PM
The filings for repurchases via options before the CWC close were done because of UK laws, afaik. They don't normally have to do things like that.

I've been sick so I haven't had a chance to review the details, but I think they haven't updated the CWC synergy numbers yet with what they really think they can get above what they could include befor the deal closed under the UK takeover regulations. I think many were expecting a more complete picture at this point. But as I said, I haven't had much of a chance to look at things closely yet, so I'm not sure.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on September 14, 2016, 06:59:31 AM
Liberty Global partners with Netflix globally.

"Netflix’s content being made available to Liberty Global video customers across more than 30 countries around the world."

http://www.businesswire.com/news/home/20160914005618/en/Liberty-Global-Lights-TV-Screens-Global-Netflix
Title: Re: LBTYA - Liberty Global
Post by: muscleman on September 14, 2016, 07:31:44 AM
Liberty Global partners with Netflix globally.

"Netflix’s content being made available to Liberty Global video customers across more than 30 countries around the world."

http://www.businesswire.com/news/home/20160914005618/en/Liberty-Global-Lights-TV-Screens-Global-Netflix

NFLX isn't profitable outside US. Could this be a win-win deal? I can see that this encourages more broadband usage, and the traditional DSL providers may not be able to support NFLX.
But how do they split the cost of content and the revenue?
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on September 14, 2016, 08:54:16 AM
Likely they don't.  I think this is probably similar to the Comcast-Netflix deal agreed earlier this year.

Getting Netflix on the LBTYA set-top boxes helps lock their cable customers in and adds new subscribers for NFLX.

NFLX is probably paying some interconnection fee for better streaming speeds.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on September 14, 2016, 09:07:29 AM
Likely they don't.  I think this is probably similar to the Comcast-Netflix deal agreed earlier this year.

Getting Netflix on the LBTYA set-top boxes helps lock their cable customers in and adds new subscribers for NFLX.

NFLX is probably paying some interconnection fee for better streaming speeds.

http://finance.yahoo.com/news/liberty-global-offer-netflix-customers-133206775.html

"No financial details were disclosed, but under the deal Liberty Global will receive a share of revenues from Netflix for customers that subscribe to the service via Liberty boxes."

So NFLX is paying LBTYA for this. Let's think about it for a moment. Traditional cable companies usually pay billions of dollars to channels as licensing fee. But now it is the other way around? The OTT "channel" NFLX is paying LBTYA?

But how about the existing content that LBTYA already paid for? Will those show in NFLX to NFLX users?


Here is what I am thinking about the contents that's already paid by LBTYA. If they make it available through NFLX, but only to the Horizon box customers, then it is a win-win because the Horizon box viewers can see the content anyway. But if the content is available to NFLX for ALL NFLX customers across the globe, then it will be a lose-win for LGI.
Title: Re: LBTYA - Liberty Global
Post by: Grenville on September 14, 2016, 10:38:02 AM
Sounds like the Netflix app sits on other provider boxes in Europe, it's not an exclusive thing with Liberty Global. It definitely simplifies the experience for the user and helps Netflix.

http://www.wsj.com/articles/netflix-to-be-on-liberty-global-set-top-boxes-1473862028?mod=yahoo_hs&yptr=yahoo (http://www.wsj.com/articles/netflix-to-be-on-liberty-global-set-top-boxes-1473862028?mod=yahoo_hs&yptr=yahoo)
Quote
Unlike the sometimes prickly relationship that Netflix has had with big U.S.-based cable providers, Netflix has received a much warmer welcome from countries abroad. Many providers bundle their subscriptions together with Netflix and offer it as an app through their set-top boxes. Liberty Global, however, had long held out from striking such a deal.

But how about the existing content that LBTYA already paid for? Will those show in NFLX to NFLX users?
The deal doesn't make LBTYA content available to NFLX users through NFLX as far as I can tell.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on September 14, 2016, 01:41:13 PM
Sounds like the Netflix app sits on other provider boxes in Europe, it's not an exclusive thing with Liberty Global. It definitely simplifies the experience for the user and helps Netflix.

http://www.wsj.com/articles/netflix-to-be-on-liberty-global-set-top-boxes-1473862028?mod=yahoo_hs&yptr=yahoo (http://www.wsj.com/articles/netflix-to-be-on-liberty-global-set-top-boxes-1473862028?mod=yahoo_hs&yptr=yahoo)
Quote
Unlike the sometimes prickly relationship that Netflix has had with big U.S.-based cable providers, Netflix has received a much warmer welcome from countries abroad. Many providers bundle their subscriptions together with Netflix and offer it as an app through their set-top boxes. Liberty Global, however, had long held out from striking such a deal.

But how about the existing content that LBTYA already paid for? Will those show in NFLX to NFLX users?
The deal doesn't make LBTYA content available to NFLX users through NFLX as far as I can tell.

Well....... I think it will be smart for LBTYA to make its own content available in NFLX, but only to the existing LBTYA customers. In this way, they are not losing anything, but only makes it more convenient for its own customers.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on October 18, 2016, 01:16:42 PM
Global buying the third biggest cable operator in Poland in cash deal:

http://finance.yahoo.com/news/liberty-global-acquire-multimedia-polska-200200286.html
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 03, 2016, 02:52:40 PM
LBTYA & LILA Q3:

http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-16-FINAL.pdf

Quote
Liberty Global Reports Q3 and YTD 2016 Results

Subscriber Additions Up 35% YTD, including 284,000 RGUs in Q3

 Operating Income up 60% YoY in Europe and 108% for LiLAC in Q3

Rebased OCF Growth >5% in Q3 for both Europe (ex Ziggo) & LiLAC

Additional LiLAC/CWC Synergies of $150 Million by Year End 2020

Repurchased ~$640 Million of Equity in Q3, Totaling $1.6 Billion YTD
Title: Re: LBTYA - Liberty Global
Post by: muscleman on November 04, 2016, 07:14:49 AM
Wow! LILA dropped over 17% today.  :o

Anything so bad in the report?
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on November 04, 2016, 08:51:35 AM
LBTYA & LILA Q3:

http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q3-16-FINAL.pdf

Quote
Liberty Global Reports Q3 and YTD 2016 Results

Subscriber Additions Up 35% YTD, including 284,000 RGUs in Q3

 Operating Income up 60% YoY in Europe and 108% for LiLAC in Q3

Rebased OCF Growth >5% in Q3 for both Europe (ex Ziggo) & LiLAC

Additional LiLAC/CWC Synergies of $150 Million by Year End 2020

Repurchased ~$640 Million of Equity in Q3, Totaling $1.6 Billion YTD


There's obviously some pretty good traction and I like the stock buyback given how low the price is.  But I'm struggling with how they will hit their 3 year target of 7-9% annualized OCF growth when they are trending closer to 5% right now.  I'm not sure the back end can make up for that shortfall.  And importantly, they've now removed Ziggo (which was the declining asset) from the base number so there should have been a pickup just from removing that.

On the flip side, they will be getting over $2.3bn in cash out of Ziggo partnership once it closes.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on November 04, 2016, 12:11:36 PM
There's a decent writeup on LBTYK in valueinvestorsclub from August I think. They say that in Europe prices are much lower, like a triple play costs 30 to 40 euro vs at least twice that in the US. That might be part of the margin growth issue. The other issue is of course the price of acquisitions and sensitivity to debt.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on November 10, 2016, 09:08:46 AM
After LILA crushing, it is LBTYA's turn today.  :o

Title: Re: LBTYA - Liberty Global
Post by: marazul on November 10, 2016, 10:51:57 AM
Name has underperformed for a while now. Decline in stock price makes sense for several reasons including:
-GBP & EUR decline
-Increased competition
-CWC acquisition at high price
-Ziggo difficulties

However, IMHO the stock has discounted these issues and might be interesting here (this is a high risk investment given the level of financial leverage, management aggresiveness and changing environment).

-After the Ziggo-Vodafone transaction (which has been approved), LGI will receive ~$2.8bn which I think will be used mostly for repurchases (roughly 10% of current market cap).
-In 2017, LGI will generate at least $1.5bn in free cash flow. This is conservative, but we have to take into consideration that they are going through a high capex period given project lighting, etc. This FCF might be used to buyback shares as well.
-Management has guided to 7-9% EBITDA growth. This might be too aggressive but at this prices, the stock works with 4-5% EBITDA growth. In a scenario in which they figure the plant expansion isn´t producing the required returns, they can cut on capex to maybe 18% of revenues. In that steady state, I think they would be able to generate $2.5-3.0bn in FCF and grow EBITDA 3-4%. That gives you a 10% FCF yield growing at low single digits which is attractive (albeit with high financial leverage)
-Finally, for a strategic like Vodafone, Orange or even a US operator this thing might be worth 10.5-11.0x EBITDA. That is a 2x from current prices.

So this is a complicated and risky stock, but might be attractive to some people here.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on November 10, 2016, 11:00:17 AM
Name has underperformed for a while now. Decline in stock price makes sense for several reasons including:
-GBP & EUR decline
-Increased competition
-CWC acquisition at high price
-Ziggo difficulties

However, IMHO the stock has discounted these issues and might be interesting here (this is a high risk investment given the level of financial leverage, management aggresiveness and changing environment).

-After the Ziggo-Vodafone transaction (which has been approved), LGI will receive ~$2.8bn which I think will be used mostly for repurchases (roughly 10% of current market cap).
-In 2017, LGI will generate at least $1.5bn in free cash flow. This is conservative, but we have to take into consideration that they are going through a high capex period given project lighting, etc. This FCF might be used to buyback shares as well.
-Management has guided to 7-9% EBITDA growth. This might be too aggressive but at this prices, the stock works with 4-5% EBITDA growth. In a scenario in which they figure the plant expansion isn´t producing the required returns, they can cut on capex to maybe 18% of revenues. In that steady state, I think they would be able to generate $2.5-3.0bn in FCF and grow EBITDA 3-4%. That gives you a 10% FCF yield growing at low single digits which is attractive (albeit with high financial leverage)
-Finally, for a strategic like Vodafone, Orange or even a US operator this thing might be worth 10.5-11.0x EBITDA. That is a 2x from current prices.

So this is a complicated and risky stock, but might be attractive to some people here.

9x EV/EBITDA isn't cheap. I'd rather buy Ferrari at 11x EV/EBITDA. They have much stronger growth and much less competition. How about CHTR? Similar multiple. Much stronger growth.  :(

I made a serious mistake buying into this by taking the valuation articles at face value. I usually compare different opportunities and found some to be obviously less attractive but I failed to do that here. I guess my discipline wasn't strong.

Title: Re: LBTYA - Liberty Global
Post by: maybe4less on November 10, 2016, 11:04:52 AM

I made a serious mistake buying into this by taking the valuation articles at face value.

"Valuation articles"?
Title: Re: LBTYA - Liberty Global
Post by: marazul on November 10, 2016, 11:07:08 AM
I have it closer to 8x after adjusting for tax assets and Vodafone payments.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on November 11, 2016, 08:05:30 AM
"-In 2017, LGI will generate at least $1.5bn in free cash flow. This is conservative, but we have to take into consideration that they are going through a high capex period given project lighting, etc. This FCF might be used to buyback shares as well."

Ebay generates $2b in FCF has about the same market cap and is asset-light. Now one should compare it during a recession, where cable/internet might beat out e-commerce, but since recession is 1/3 of the time and normal operating parameters is 2/3 of the time, it's interesting to see what else is out there that has similar valuations.

Title: Re: LBTYA - Liberty Global
Post by: marazul on November 11, 2016, 08:42:37 AM
FWIW, in a steady state (after all these big capex projects) I think capex should be slightly less than 20% of revs. In that scenario FCF would be ~$3.0bn
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on November 11, 2016, 08:47:28 AM
Marazul, excellent point! I've always wondered about cable companies in every country, USA, Canada, Europe, LATAM. Do you know historically if capex is something that 'sometimes' normalizes lower or is it like the airline industry where you keep hoping it will end but then a new wave of new developments force you to keep spending. This would make a big difference in valuation if they can get the capex down. Is price-competition due to cord cutting going to lead to lower capex that far exceeds the decrease in subscriber revenue, which would be a big positive for FCF?
Title: Re: LBTYA - Liberty Global
Post by: marazul on November 11, 2016, 09:23:34 AM
This is my opinion and might be wrong.

-If you look at Comcast, which is a large and maybe called "mature" operator, current capex intensity is 14% of revenues and 35% of EBITDA. Capex as % of EBITDA is a better comparison once we compare US operators vs LBTY given content costs are way higher in the US, thus ARPUs are higher. So let´s say LBTY gets to capex of 35%/EBITDA that would give us a FCF number slightly over $3.0bn using current cash flow.

-In terms of historic figures for LBTY, they were close to these levels of capex intensity back in 2011-2012. Currently, they have a huge project to increase # of passings in UK and Germany. This is what is moving capex intensity higher. Thye are also offering new STBs as a way to improve their video offering. These are the two drivers for the high capex levels. I think the first one is just a temporal thing given the economics of new builds (targeting 30% unlevered IRR, which might be lower given competition). The STB issue is complicated. As technologies evolve they might be require to imporve their equipments on a recurring basis. However, they are trying to implement a cloud based offering in which they can make changes remotely. This would be huge for cable operators. This would reduce capex significantly and service visits. If the industry is succesful with this rollout, then FCF will be much higher.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on November 11, 2016, 09:59:13 AM
Thank you for the analysis, very thoughtful and intriguing to think about.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 16, 2016, 03:50:56 PM
http://mobile.reuters.com/article/idUSL8N1DH3U7

"Vodafone says regulators might welcome any new Liberty deal"
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 13, 2016, 08:19:57 AM
Looks like the Ziggo-VOD JV in the Netherlands is ready to move forward:

https://www.telecompaper.com/news/acm-approves-t-mobile-takeover-of-vodafone-thuis--1175876
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 23, 2016, 06:39:19 PM
http://www.fiercecable.com/cable/altice-offs-belgium-luxembourg-biz-to-john-malone-for-417m-as-anxiety-builds-among-u-s

 Looks like the economics just got better in Belgium.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 16, 2017, 08:13:13 AM
Q4:

Quote
European Highlights
• 2016 RGU additions of 946,000 were up 24% or 186,000 year-over-year on an organic basis
    Increase driven by materially lower video churn and higher broadband gains
    YoY improvement fueled by 304,000 U.K. adds and turnaround in the Netherlands
• Q4 organic customer relationship15 additions of 46,000 drove full-year increase of 25,000
• Gained 402,000 organic mobile postpaid subscribers in 2016, driven by the U.K. and Belgium
• Q4 Operating income up 22% YoY, rebased OCF growth excluding Ziggo of 7.5% in Q4
    2016 Operating income increased 18%, while rebased OCF (excl. Ziggo) grew 4.3%
• Delivered $2.0 billion of Adjusted FCF in 2016, beating our guidance of $1.8 billion16
• Achieved our new build program target of >1.3 million European homes during 2016
   Added 1.4 million new homes in 2016, including 465,000 in U.K./Ireland

Presentation:

http://www.libertyglobal.com/pdf/presentations/Liberty-Global-Group-Q4-2016-Investor-Call-Presentation-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: Liberty on March 15, 2017, 10:06:18 AM
Here we are again, new rumors that LBTYA and VOD are back at the negotiation table:

https://www.theregister.co.uk/2017/03/15/vodafone_liberty/
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on March 15, 2017, 10:26:24 AM
Could be a Germany JV like what they did with the Dutch JV.
Title: Re: LBTYA - Liberty Global
Post by: marazul on March 15, 2017, 10:37:28 AM
Germany JV is not very likely imho, since Unitymedia is a regional operator...while Ziggo basically covers a high % of the country making it a better fit to offer mobile service with
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on March 21, 2017, 11:14:18 AM
VOD deal in India with Idea and Birla.  Frees up balance sheet by deconsolidating Vodafone India.  Could free up cash by selling stake in India cell tower business too.

https://www.ft.com/content/e2f80606-0d68-11e7-a88c-50ba212dce4d
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 07, 2017, 11:18:05 AM
Q1 results:

http://www.libertyglobal.com/pdf/press-release/LG-Q1-2017-Press-Release-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on May 07, 2017, 01:42:21 PM
'rebased OCF'? Sends shivers down my spine :)
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on May 07, 2017, 04:02:23 PM
Lilac numbers are crappy. OCF for CWC is down almost 20% YoY. Unfortunately CWC is now 2/3 of the company.
Title: Re: LBTYA - Liberty Global
Post by: muscleman on May 07, 2017, 08:56:18 PM
Lilac numbers are crappy. OCF for CWC is down almost 20% YoY. Unfortunately CWC is now 2/3 of the company.

I lost quite a bit of money on LILA and sold at a big loss last year. I am glad I did the right thing.  >:(
Title: Re: LBTYA - Liberty Global
Post by: fa21212 on May 07, 2017, 10:41:42 PM
YoY is less important than sequential given that previous management juiced the numbers right before they sold to get a bigger bonus. But sequentially it's still not great, but not that bad.
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on May 09, 2017, 07:46:44 PM
I really don't understand what is going on with Mobile in the UK?  Can anyone explain it to me.  On the call, Mike Fries punted to the CFO.  and then he basically said, "Mike already mentioned the issues with mobile".

There were a few things going on but I don't understand them.

1) prepaid subs in Belgium declined in response to a regulation that requires SIM card registration??  why would this matter?
2) Decrease in UK mobile relates to: 1) lower ARPU in UK including $22.9M decline in post paid mobile revenue related to "UK split contract Program."...

anyone understand what they're talking about here? 

They also lost 8M in Fixed line revenue due to a changes in regulations governing payment handling fees. 
 That is discussed here:

http://www.ispreview.co.uk/index.php/2016/03/virgin-media-slash-non-direct-debit-payment-handling-fees-45p.html

Guess they were ripping off their customers with a 5 pound charge for debit payments!

I'm sorta tired of listening to the constant sales pitch from Mike Fries every quarter.  They're really losing credibility. It's hard to focus on  their earnings calls because they aren't consistent in discussing results.  They just tell you all the numbers that are going up.
 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on August 07, 2017, 03:45:29 PM
Q2:

http://www.libertyglobal.com/pdf/press-release/LG-Q2-2017-Press-Release-FINAL.pdf

Q2 Rebased OCF Growth of 6% in Europe

Q2 LBTY Share Repurchases of $1.2 Billion and $2.2 Billion YTD
Title: Re: LBTYA - Liberty Global
Post by: fareastwarriors on August 13, 2017, 04:28:35 PM
America’s ‘Cable Cowboy’ Lays the Groundwork for Internet Dominance Beyond the U.S.
John Malone’s Liberty Global is betting on the next generation of wireless service

https://www.wsj.com/articles/americas-cable-cowboy-lays-the-groundwork-for-internet-dominance-beyond-the-u-s-1502622002 (https://www.wsj.com/articles/americas-cable-cowboy-lays-the-groundwork-for-internet-dominance-beyond-the-u-s-1502622002)
Title: Re: LBTYA - Liberty Global
Post by: forest81 on August 14, 2017, 08:40:55 AM
Lou Simpson adding
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on November 01, 2017, 06:46:52 PM
Another dookie quarter.  Why am I even in this name?

http://www.libertyglobal.com/pdf/press-release/LG-Q3-2017-Press-Release-FINAL.pdf
Title: Re: LBTYA - Liberty Global
Post by: Liberty on November 29, 2017, 06:45:07 AM
Restarting the deal rumor mill:

http://www.telegraph.co.uk/business/2017/11/28/virgin-media-owner-liberty-global-eyes-swiss-exit-latest-manoeuvre/
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on December 06, 2017, 05:40:14 PM
a lot of speculation here

Austria is a very small market with very little room for growth and scaling outside of Austria is difficult minus whatever the underlying value of administrative synergies...and I believe the Swiss team manages the Austrian assets

that said, the stock might be as cheap as it is misunderstood

the play, as I understand it, is the synergies found when collapsing the categories of cable broadband and wireless carrier as different businesses and markets

I think they are on the cusp of material improvements in cash flows
Title: Re: LBTYA - Liberty Global
Post by: EricSchleien on December 06, 2017, 06:17:09 PM
a lot of speculation here

Austria is a very small market with very little room for growth and scaling outside of Austria is difficult minus whatever the underlying value of administrative synergies...and I believe the Swiss team manages the Austrian assets

that said, the stock might be as cheap as it is misunderstood

the play, as I understand it, is the synergies found when collapsing the categories of cable broadband and wireless carrier as different businesses and markets

I think they are on the cusp of material improvements in cash flows

It's cheap but I'd say LiLAC is cheaper.
Title: Re: LBTYA - Liberty Global
Post by: mwtorock on December 07, 2017, 06:03:18 AM
LiLAC does look interesting, plus Malone bought more of that at higher PPS I heard. Will look more into it.
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on December 07, 2017, 06:43:05 AM
LILAC is definitely cheap but I'm still not sure of the long term impacts of the hurricanes on Puerto Rico.  Is it a temporary rebuild covered by insurance or a larger hit to the long term value of that franchise.
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on December 07, 2017, 09:45:33 AM
LILAC might be cheaper but it's likely not to return until everything gets cleaned up

If any of you follow the reinsurance markets, the clear trend is that natural disasters are not only more severe but more frequent

LILAC may always trade under the European assets because of the additional risk, which in turn might yield greater performance over time

That said, the recent hurricane season has had an impact and the business needs a couple years before material improvements will be felt

I'm of the opinion that Liberty Global will likely see results sooner and that the stock is not priced to reflect
Title: Re: LBTYA - Liberty Global
Post by: EricSchleien on December 07, 2017, 11:17:36 AM
LILAC might be cheaper but it's likely not to return until everything gets cleaned up

If any of you follow the reinsurance markets, the clear trend is that natural disasters are not only more severe but more frequent

LILAC may always trade under the European assets because of the additional risk, which in turn might yield greater performance over time

That said, the recent hurricane season has had an impact and the business needs a couple years before material improvements will be felt

I'm of the opinion that Liberty Global will likely see results sooner and that the stock is not priced to reflect

1. It's actually pretty easy to figure out impact of hurricane. If you take extreme worse case scenarios then see how that impacts intrinsic value.

2. Waiting for things to clear. By the time things get more certain, the market will bid that up.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on December 21, 2017, 11:44:45 AM
“Liberty Global near deal to sell Austrian $2B to Deutsche Telekom”:

https://www.ft.com/content/6f67630c-9006-3c36-b391-10097fe66aad
Title: Re: LBTYA - Liberty Global
Post by: forest81 on December 22, 2017, 04:25:09 AM
Deal Done. Good price for a business doing $342m a year. Personally think the Vodaphone deal will happen now. Makes so much sense if they can manage to put the businesses together.

https://www.ft.com/content/7bd29f22-bb2d-3684-bccf-083ed1a5d2b0
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on December 22, 2017, 04:43:16 AM
interesting question. Is selling a small business earning 17% worth it to buy a big business earning probably much less? Size vs profitability, is there a clear winner?
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 02, 2018, 09:04:20 AM
Vodafone in talks to buy Liberty Global assets

https://www.reuters.com/article/us-vodafone-m-a-liberty-global/vodafone-in-talks-to-buy-liberty-global-assets-idUSKBN1FM24W

Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on February 02, 2018, 09:41:44 PM
I wonder what the new raison d'etre of Liberty Global will become if they do end up selling all those assets.
After all, they've just spent the past 15 years bringing them together through M&A in the first place...

We'd be left with a reduced scale cable provider, mostly just the UK and Belgium, plus a boatload of cash?
Something tells me a special dividend is very unlikely because it would trigger taxation.
I was also surprised to hear of a cash purchase rather than some complex stock swap with Vodafone.
I've just never seen a Liberty entity shrink so I'm not sure what to expect in terms of Malone's playbook here.
Title: Re: LBTYA - Liberty Global
Post by: maybe4less on February 03, 2018, 12:19:21 AM
I was also surprised to hear of a cash purchase rather than some complex stock swap with Vodafone.

I doubt there is a cash purchase if this happens. More likely an asset swap, which is what is mentioned in the article Liberty posted.

Did you see somewhere else a reference to a cash purchase?
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on February 03, 2018, 10:55:43 AM
My bad, I recalled the Bloomberg article mentioning a €14B deal but either they've updated their article since yesterday or I was tired and made it up  ::)
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 21, 2018, 10:11:56 AM
https://www.broadbandtvnews.com/2018/02/19/liberty-global-considers-acquisitions-for-upc-switzerland/
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on February 22, 2018, 02:27:44 PM
https://www.bloomberg.com/news/articles/2018-02-22/malone-s-new-hurdle-to-vodafone-deal-is-an-angry-german-ceo

If Deutsche Telekom is getting pissed off then Liberty/Vodafone might be doing the right thing :)
Anyone familiar with EU regulators? I read that Liberty has strong lobbying in Brussels but DT must be powerful too... especially in their own country.
Title: Re: LBTYA - Liberty Global
Post by: wisborough on February 25, 2018, 09:14:51 AM
i am becoming convinced this company is  a short.  its recent results were terrible - its spending over 30% of its sales on capex in the UK and its barely growing - in fact its broadband adds were negative in q4 in the UK outside of its ' Lightening ' territory. it raised its capex AGAIN, who is to say that it isn't capitalising costs so it can show OCF growth .   it suddenly started the new 'talks'  with Vodafone just before its Q4 release - so the shorts wouldn't pounce.  i have totally run out of patience with this company.  levered equity growth models DO NOT work without genuine growth. 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on February 25, 2018, 10:29:45 AM
I don't know if it's a short, because someday they could actually do a big merger or M&A thing that the market happens to like and it could jump on the news, but in general I've become disillusioned with it and sold my shares last fall. I felt like there were better places to put the capital. This capitulation probably means we're at the bottom, though, so it might actually be a good time to buy...
Title: Re: LBTYA - Liberty Global
Post by: ABM on February 25, 2018, 10:38:08 AM
i am becoming convinced this company is  a short.  its recent results were terrible - its spending over 30% of its sales on capex in the UK and its barely growing - in fact its broadband adds were negative in q4 in the UK outside of its ' Lightening ' territory. it raised its capex AGAIN, who is to say that it isn't capitalising costs so it can show OCF growth .   it suddenly started the new 'talks'  with Vodafone just before its Q4 release - so the shorts wouldn't pounce.  i have totally run out of patience with this company.  levered equity growth models DO NOT work without genuine growth.

This has been the short argument really since they began issuing guidance a few years back. It comes back to how much you trust management. We will not know the "truth" until hindsight is available so all investors can do is evaluate management's integrity and skill level based on what factors you see fit.  Each investor has to make their own decision.  If the short case is true then it means investors are being lied to which is a big deal and many conclude that this would fly in the face of what they consider to be an honest and transparent record for the leadership.

In my opinion, management has proven to be consistently rational so they should have no qualms of exiting if the returns just are not there to preserve value.  This is in stark contrast to many management teams that are hyper-focused on value accumulation that it often comes at the expense of making rational decisions. These decisions ultimately lead to things like like expensive acquisitions and owning assets with deteriorating quality given natural resistance to divestitures.
Title: Re: LBTYA - Liberty Global
Post by: vince on March 17, 2018, 03:47:02 PM
can someone please share what lbtya's real ebitda is? i hear analysts and others saying roughly 8 billion, but it clearly shows ltm of 7 billion on 4th qtr slides.  Is the difference attributable to equity method in Ziggo? and if so how would you incorporate that into enterprise value.  basically trying to figure out what the true ev to ebitda is.  i have owned a position for 4 years and have not made any money and i share the frustration of other posters.  in addition i cant stand the way the ceo acts and speaks and he is the main reason the stock is still undervalued despite shrinking the equity considerably since i owned it.  why do i say its undervalued? it has equity cap of 26 billion.  imo it can grow fcf by 5 percent annually while spending 20-22 percent of revenues.  with free cash flow around 2.5 billion(when elevated capex falls) you have a mid teens compounder with a constant multiple and a very good chance of multiple expansion.  another way to look at it is if the company sold for 11 times ebitda(which is reasonable considering the fact that much smaller assets sell for that multiple where scale is valuable)you get somewhere between 77 and 88 billion.  lets say 80 billion enterprise value minus 35 billion debt equals 45 billion equity compared to market cap of 26 or so.  i would say thats a good place to be in an overvalued market where mgmt is having talks that could potentially bring some of that to the surface.  even if u give a haircut to fcf, growth rates and lower exit ebitda multiples, u can still do good here over a few years with buybacks at these low prices
Title: Re: LBTYA - Liberty Global
Post by: ABM on March 18, 2018, 04:24:22 PM
can someone please share what lbtya's real ebitda is? i hear analysts and others saying roughly 8 billion, but it clearly shows ltm of 7 billion on 4th qtr slides.  Is the difference attributable to equity method in Ziggo? and if so how would you incorporate that into enterprise value.  basically trying to figure out what the true ev to ebitda is.  i have owned a position for 4 years and have not made any money and i share the frustration of other posters.  in addition i cant stand the way the ceo acts and speaks and he is the main reason the stock is still undervalued despite shrinking the equity considerably since i owned it.  why do i say its undervalued? it has equity cap of 26 billion.  imo it can grow fcf by 5 percent annually while spending 20-22 percent of revenues.  with free cash flow around 2.5 billion(when elevated capex falls) you have a mid teens compounder with a constant multiple and a very good chance of multiple expansion.  another way to look at it is if the company sold for 11 times ebitda(which is reasonable considering the fact that much smaller assets sell for that multiple where scale is valuable)you get somewhere between 77 and 88 billion.  lets say 80 billion enterprise value minus 35 billion debt equals 45 billion equity compared to market cap of 26 or so.  i would say thats a good place to be in an overvalued market where mgmt is having talks that could potentially bring some of that to the surface.  even if u give a haircut to fcf, growth rates and lower exit ebitda multiples, u can still do good here over a few years with buybacks at these low prices

it is trickier than most because the unconsolidated interests and the big minority interest in Telenet.

I tend to use the "proportionate" or "fully attributed" approach which is essentially looking through to the underlying assets and taking their proportionate earnings and net debt given LBTYK's economic stake.  Using this approach and for this company you really only need one other set of financials which are Ziggo's which can be found on LBTYK's website.

If you are going to use GAAP financials then you need to add minority interest to EV because their proportionate OCF is include in the consolidated OCF figure.  On the equity accounted JV assets ex Ziggo are pretty immaterial so you can treat these as cash net of some discount/haircut, if any, but doesn't really make a difference b/c of ltd magnitude. You can choose not to include them at all to be conservative. Oh and LBTYK has $1B receivable from Ziggo seperate from its 50% stake. You can do what you like with that but again it's pretty small part of grand plan.

2017 OCF = $7.4B (att) vs. $7.1B per FS

Net debt including capital lease obligations = $43.8B (att) vs. $40.8B per the FS
Title: Re: LBTYA - Liberty Global
Post by: vince on March 20, 2018, 07:35:05 AM
Thanks, very much appreciated
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on March 20, 2018, 01:36:12 PM
https://www.bloomberg.com/news/articles/2018-03-20/liberty-is-said-to-hold-talks-with-sunrise-for-swiss-partnership

UPC Switzerland had an MVNO agreement with Orange since 2014, they switched to Swisscom just two months ago and said they were thrilled with the quality of this new deal in the Call... Now they may be instead looking at a full joint venture with Sunrise for their quad play service. Glad the CEO is leaving no stone unturned but there doesn't seem to be a unified vision behind his moves (they almost exited this market all together in December).

Because of these incessant early "leaks" and the absence of organic growth, the rumor mill has become the main factor Liberty Global trades upon... I wish they'd fix their existing businesses instead of changing the parameters constantly and releasing a new bullshit guidance "excluding such and such" every quarter.

By the way thank you for sharing your calculations ABM and Vince!
[Been stuck in this for almost two years now (Liberty family + lots to consolidate in Europe + it seemed cheap no matter what metric I used)]
https://twitter.com/maffei_fake/status/973269838654185472
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on March 20, 2018, 03:21:11 PM
I think the cable stocks will not like the increasing interest rates eventually. Considering how utilities have and continue to sell of, I am surprised how well cable stocks have held up.
Title: Re: LBTYA - Liberty Global
Post by: maybe4less on March 21, 2018, 10:43:16 AM
I think the cable stocks will not like the increasing interest rates eventually. Considering how utilities have and continue to sell of, I am surprised how well cable stocks have held up.

Higher interest rates will surely hurt cable companies in terms of higher interest costs, but utilities are generally a totally different beast. High quality cable systems are growing with attractive opportunities to deploy capital.

Utilities are unable or unwilling to make similar types of investments. They are therefore growing minimally and are treated probably correctly like bond equivalents with much of the duration you would expect long-term bonds to have.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on March 21, 2018, 03:46:15 PM
I think the cable stocks will not like the increasing interest rates eventually. Considering how utilities have and continue to sell of, I am surprised how well cable stocks have held up.

Higher interest rates will surely hurt cable companies in terms of higher interest costs, but utilities are generally a totally different beast. High quality cable systems are growing with attractive opportunities to deploy capital.

Utilities are unable or unwilling to make similar types of investments. They are therefore growing minimally and are treated probably correctly like bond equivalents with much of the duration you would expect long-term bonds to have.

So you say. I don’t see any evidence of highly attractive opportunities to deploy capital for LBTY, based on the results from the last few years. I think this should be treated as an utility and not a very profitable. I think investors make the mistake to equal Europe with the US cable business, but in fact Europe is way more competitive.
Title: Re: LBTYA - Liberty Global
Post by: vince on March 21, 2018, 11:17:19 PM
Hang in there WayWard.  I am just as frustrated as you and have owned it longer.  But it is so obvious that the cable line is advantaged and growing more valuable every month.  Even with mismanagement, and even with slow growth (does anyone really believe that they will have multiple years of negative growth?) that asset will save us.  They could sell the whole thing tomorrow for 11 times and everyone knows it.  If the business was truly starting to shrink in value, Dr M will know exactly what to do to make a large profit at today's prices.  And every dollar of buybacks at these prices are certain to end up in our pockets.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on March 22, 2018, 04:26:45 AM
There have been academic studies showing cable cos in the US at least have been able to raise prices above the rate of inflation. ...EU cable and internet packages are much lower than in USA. Not sure why there is a cost difference. Maybe regulation in EU preventing higher prices? Or just not able to sustain higher prices given the local markets? Either way makes sense profit margins are lower than in the US if there is the inability to get a higher return on invested capex.


Title: Re: LBTYA - Liberty Global
Post by: marazul on March 22, 2018, 07:21:43 AM
Cable bills are higher in the US due to higher content costs...for this reason Euro cable has higher EBITDA margins but lower ARPU...doesn´t have a significant impact on overall profit, but the customer has less pressure because of a lower bill ...Competition is tougher in many European countries becuase Telcos have a better network (more FTTH) than US telcos, city densities (shorter copper distances) and there are open networks (companies can resell services by using a third party network)
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on March 22, 2018, 08:22:49 AM
Plus the public TV channels are basically free / low cost so the commercial channels need to match them and also distribute free. You buy a satellite dish and receiver and get the TV (> 50 channels) free. There are pay channels like premium soccer or HBO equivalent but the rest is free.
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on March 22, 2018, 01:29:57 PM
can someone please share what lbtya's real ebitda is? i hear analysts and others saying roughly 8 billion, but it clearly shows ltm of 7 billion on 4th qtr slides.  Is the difference attributable to equity method in Ziggo? and if so how would you incorporate that into enterprise value.  basically trying to figure out what the true ev to ebitda is.  i have owned a position for 4 years and have not made any money and i share the frustration of other posters.  in addition i cant stand the way the ceo acts and speaks and he is the main reason the stock is still undervalued despite shrinking the equity considerably since i owned it.  why do i say its undervalued? it has equity cap of 26 billion.  imo it can grow fcf by 5 percent annually while spending 20-22 percent of revenues.  with free cash flow around 2.5 billion(when elevated capex falls) you have a mid teens compounder with a constant multiple and a very good chance of multiple expansion.  another way to look at it is if the company sold for 11 times ebitda(which is reasonable considering the fact that much smaller assets sell for that multiple where scale is valuable)you get somewhere between 77 and 88 billion.  lets say 80 billion enterprise value minus 35 billion debt equals 45 billion equity compared to market cap of 26 or so.  i would say thats a good place to be in an overvalued market where mgmt is having talks that could potentially bring some of that to the surface.  even if u give a haircut to fcf, growth rates and lower exit ebitda multiples, u can still do good here over a few years with buybacks at these low prices

it is trickier than most because the unconsolidated interests and the big minority interest in Telenet.

I tend to use the "proportionate" or "fully attributed" approach which is essentially looking through to the underlying assets and taking their proportionate earnings and net debt given LBTYK's economic stake.  Using this approach and for this company you really only need one other set of financials which are Ziggo's which can be found on LBTYK's website.

If you are going to use GAAP financials then you need to add minority interest to EV because their proportionate OCF is include in the consolidated OCF figure.  On the equity accounted JV assets ex Ziggo are pretty immaterial so you can treat these as cash net of some discount/haircut, if any, but doesn't really make a difference b/c of ltd magnitude. You can choose not to include them at all to be conservative. Oh and LBTYK has $1B receivable from Ziggo seperate from its 50% stake. You can do what you like with that but again it's pretty small part of grand plan.

2017 OCF = $7.4B (att) vs. $7.1B per FS

Net debt including capital lease obligations = $43.8B (att) vs. $40.8B per the FS

I more or less get the same thing excluding UPC Austria as well.  Look through EPS of about $2.60 for 2018 and if we count the fair value of securities, the UPC Austria sale price of $2.2B and the publicly held securities for ITV etc, I think there's about 4.5B of excess capital on the balance sheet now (assuming $500M of W/C). 

Mediocre execution, tougher business than it used to be, cheap debt...but cheap stock.  I've been frustrated for 2 years as well but by my math, if EBITDA goes up 6%-7%, this stock compounds around mid to high twenties % for the next 4-5 years.
Title: Re: LBTYA - Liberty Global
Post by: vince on March 22, 2018, 02:17:26 PM
Hey Shooter, you mean ebitda growth of 6-7 percent annually? I felt that was achievable a few years ago but probably not gonna happen on a consistent basis.  But ya, I agree, no doubt it will compound at 20 plus percent if we get that growth!!
Title: Re: LBTYA - Liberty Global
Post by: vince on March 22, 2018, 02:28:54 PM
Hey Shooter, what adjustments are you making to get your eps number.  Are you saying look thru and owner earnings are equivalent?
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on March 22, 2018, 03:04:28 PM
Hey Shooter, what adjustments are you making to get your eps number.  Are you saying look thru and owner earnings are equivalent?

Hey Vince,

I think either we get the 6% -7% EBITDA growth through new build , or we see cash flow grow and repurchases increase because capex goes down 10% (of revenue and marketing drops 2% of revenue).  In other words, i don't think they're going to spend a full $4B capex in 2019 if the new build doesn't work.  But why shouldn't it work?  They're telling you how you get to roughly 30% IRR on this project so unless they're delusional, I think it'll work to some degree and we'll get some combination of FCFE growth through RGU adds or a slow down in spending.  Now are they incredibly promotional?...yes...but I think they do know what they're doing. Though this story has waaay too many moving parts. 

In terms of my EPS estimate for 2018, I sort of cheated...I stripped out the 46% of Telenet not owned and added 50% of Ziggo and excluded $200M of UPC Austria right at the EBITDA level ( gets me $7.560B..which is basically annualized 4Q).  Then I assumed the debt was going to stay at around 5.2x on a gross basis (so basically all subs have this debt ratio even though this isn't exactly right), cost 5.5% (be a bit more conservative), and my run rate depreciation is roughly 20% of revenue ($2.5B). I taxed it at 20% and used a fully diluted share count of around 884M.  Didn't give them any credit for any income earned on cash or the note.  gets me to around $2.60 EPS.



Threw this modification in afterwards:
Yes, I'm saying the "look through" to the shareholder is my adjusted number above...I'm saying EBITDA for how they define OCF.

Another modification:

Since the public shares like sumimoto and ITV etc are financed and pledged, maybe we don't count them as excess capital.  Just whatever is the equity value over the financed portion probably, although i havent done the math.






Title: Re: LBTYA - Liberty Global
Post by: jgyetzer on March 22, 2018, 05:19:51 PM
How do people on this board attribute capex to growth investment vs. maintenance for this LBTYA and other cable/broadband providers?  To me it seems like upgrades to existing networks would be treated differently than new builds and both of these different from on-site customer hardware/equipment.  Another way to look at it would be comparing SAC to lifetime value of customers, but it seems difficult to get a fix on these numbers.  Is anyone on the board aware of any cable providers that break this information out in detail either in SEC documents or conference calls? 
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on March 22, 2018, 05:45:25 PM
How do people on this board attribute capex to growth investment vs. maintenance for this LBTYA and other cable/broadband providers?  To me it seems like upgrades to existing networks would be treated differently than new builds and both of these different from on-site customer hardware/equipment.  Another way to look at it would be comparing SAC to lifetime value of customers, but it seems difficult to get a fix on these numbers.  Is anyone on the board aware of any cable providers that break this information out in detail either in SEC documents or conference calls?

Based on what they've said, 20% of revenue in capex is roughly run-rate depreciation for LBTYA.  I guess you could get more granular because they do break it out, but I'm not sure it would add much to an analysis.

From memory, Comcast's cable biz is around 11-12% of revenue and Charter is around 13-14% for run rate capex.  They also break it out similarly.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on March 22, 2018, 06:28:42 PM
Seems to me that CMCSA at 8x EBITDA is a far better bet than LBTYA right now. I am surprised how far CMCSA has fallen, due to increased interest rates and maybe the SKY acquisition. However, CMCSA are excellent operators, while LBTYA seem to fumble around. I know where I will put my money.
Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on March 23, 2018, 05:25:14 AM
Seems to me that CMCSA at 8x EBITDA is a far better bet than LBTYA right now. I am surprised how far CMCSA has fallen, due to increased interest rates and maybe the SKY acquisition. However, CMCSA are excellent operators, while LBTYA seem to fumble around. I know where I will put my money.

Hey Spekulatius,

I'm asking as someone who doesn't follow Comcast super closely except for the cable business.  What do you think the upside for Comcast is from here, like 3-4 years out?  is it a mid to high teens returns annual compounder?  low to mid twenties?  more?  I see that they lever less than the liberties and pay out dividends.  You've peaked my interest.
 
Title: Re: LBTYA - Liberty Global
Post by: vince on March 23, 2018, 07:23:17 AM
Hey Spekulatius,

they do have programming assets that one could argue are not worth same multiple.  Having said that I like them at these prices and have been debating whether I want to spend the effort to have a deep look.
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on March 23, 2018, 01:59:28 PM
If John Malone died tomorrow, I'd sell all my Liberties and likely buy some Comcast at least.

But then I'm a jockey investor, so ./shrug  8)
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on March 23, 2018, 05:13:34 PM
Hey Spekulatius,

they do have programming assets that one could argue are not worth same multiple.  Having said that I like them at these prices and have been debating whether I want to spend the effort to have a deep look.

I bought some today. I think the valuation looks more than fair, which is quite in this market. I have been watching them since about 2010,but never bought shares. They are good operators and now how to make acquisitions work. I think they will make SKY work too. They bought NBC from those morons at GE for cheap and turned it around and it’s doing quite well.

I think Comcast is suitable even for  jockey investors, but their playbook is different then Malone’s -less leverage, less deal dependent and just focused to generate  the max out of the business with what looks to be a long term view. I like it.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on March 26, 2018, 10:35:45 AM
https://www.totaltele.com/view.aspx?ID=499718

Liberty Global scraps $876m bid for Multimedia Polska
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on April 23, 2018, 03:52:22 PM
https://www.ft.com/content/28a1f082-3738-11e8-8eee-e06bde01c544

More rumors about an imminent Vodafone deal  ::)
According to the article, the regulator is the big question mark here. Fingers crossed!
Title: Re: LBTYA - Liberty Global
Post by: Liberty on April 23, 2018, 04:50:24 PM
There's been rumors on and off for so long, when (if) it actually happens I'm not sure I'll believe it at first...
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on April 23, 2018, 05:13:05 PM
I'm wondering if the sell of UPC Austria to DT in December could have been a super clever Malone bait to clear out the way for the coming Vodafone transaction.
The deal was much smaller of course but it can be used to argue to the EU regulator that DT themselves didn't have a problem with consolidating a cable + mobile market when it was in their interest.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 07, 2018, 08:48:06 AM
Again:

https://www.reuters.com/article/us-liberty-global-m-a-vodafone/vodafone-closes-in-on-game-changing-liberty-global-deal-idUSKBN1I41PE
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 08, 2018, 09:34:14 AM
Finally?

https://seekingalpha.com/news/3353843-ft-vodafone-closing-18b-asset-deal-liberty-global

Quote
After long flirtations, Vodafone (VOD -1.4%) is finally closing in on a game-changing European asset deal with John Malone's Liberty Global (LBTYA -2.8%) that could come tonight, the Financial Times reports.

A finalized €18B deal for Vodafone to buy German and eastern European assets from Liberty might come with Liberty's earnings tonight, though the transaction could slip a few days, according to the report.

Getting hold of cableco Unitymedia in Germany would give Vodafone a better competitive interface with Deutsche Telekom
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on May 08, 2018, 09:35:17 AM
Guesses on where Malone redeploys this capital?

I'm hoping it's not coming back to shareholders in the form of capital return.
Title: Re: LBTYA - Liberty Global
Post by: SI on May 08, 2018, 10:30:55 AM
Mike is on record saying they aren't selling a high multiple biz to buy a high mult biz - my guess is ITV.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on May 08, 2018, 10:38:37 AM
So besides doubling down on UK business, any cable assets ex-Europe that are cheap?  Besides LatAm.  Millicom or Megacable maybe but that would just be weird after spinning off LILA.

Would Malone/Fries look at ATUS and then combine Liberty with CHTR?

Africa, Asia, ME are just not good cable markets.
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on May 08, 2018, 10:54:49 AM
Mediacom is up for sale.  Nice tuck in for Charter.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 09, 2018, 03:35:05 AM
Here we go:

https://www.wsj.com/articles/vodafone-confirms-deal-to-buy-some-of-liberty-globals-european-assets-for-nearly-23-billion-1525845601

Presentation:

http://www.libertyglobal.com/pdf/presentations/Liberty-Global-Q1-2018-Earnings-Presentation.pdf
Title: Re: LBTYA - Liberty Global
Post by: AJDelphi on May 10, 2018, 09:15:05 AM
So they sold Austria at 11x EV to OCF and Germany, Hungary, Romania, Czech Republic to Vodafone for 11.5x. Looks pretty straighforward what they value the business at. When they bought Virgin Media in 2013 it was at 8.8x OCF.

With the 10 billion in cash I'd be totally fine with them buying back the stock heavily with the shares around $30. Could make a large acquisition too though. Maybe Telecom Italia.
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on May 10, 2018, 10:52:03 AM
I haven't looked thru the whole presentation but did they mention tax impact of the sale?  I have to assume there's gains there that will dissipate net cash available for redeployment.

Of course Malone rarely makes a move without having the tax aspect covered off favorably.
Title: Re: LBTYA - Liberty Global
Post by: colinwalt on May 10, 2018, 11:07:50 AM
From the call transcript:

After debt and working capital adjustments, total net cash proceeds from the transaction are expected to be EUR10.6 billion or around $13 billion and that assumes we deliver the CE assets debt free and Vodafone assumes the debt in Germany. On top of that, we will keep all the cash generated by these businesses between now and closing, however long that takes and we know at the top of everyone's mind is use of proceeds. I get that, but given that this transaction will take between 12 and 15 months to close, we're not going to start spending money that isn't ours.





So the EUR10.6 billion or the $13 billion is kind of how this transaction was built up. So, there's been some dueling enterprise values out there and I try to indicate in my remarks, as we get that, but if you believe that 10.6 billion or EUR10.8 billion that we and both Vodafone reported, that is the cash proceeds figure after all debt is accounted for, Jeff, and all taxes and I'll tell you that at this point, we view -- we think there will be no cash taxes owed on this transaction. We get to that EUR19 billion by simply adding as GAAP accounting requires us to do, the various liabilities in the transaction and that is EUR19 billion. So everybody's got their approach to it. That's fine. The main figure here is we agree on the net proceeds, so you can build up the enterprise value as you choose, we did it on a GAAP basis and that's how we got to 19, which is 11.5 times 2017 operating cash flow. But the EUR10.6 billion figure is after all debt is either assumed in Germany and therefore reduced from the 19 or already repaid we're delivering to Eastern European assets debt free, so that is the number.


I’ll repeat what I said in the remarks, the deal won't be done for over a year. So if you can tell us where stocks and interest rates and market multiples will be 12, 15 months from now, I'll tell you what we'll do with the capital, but I can assure you we have no deals in the queue that require any capital, so there's nothing for us to announce. There's no big transactions spending. There's nothing we even have our eye on that would require capital. And I think as you know and I have already indicated, buybacks are a big part of what we do. We've already bought back half this company in the last ten years and at today's price, where it is right now, if this is where the stock was in a year, we'd probably use every penny of it to buy the stock back.
Title: Re: LBTYA - Liberty Global
Post by: undervalued on May 10, 2018, 11:47:14 AM
From the call transcript:

After debt and working capital adjustments, total net cash proceeds from the transaction are expected to be EUR10.6 billion or around $13 billion and that assumes we deliver the CE assets debt free and Vodafone assumes the debt in Germany. On top of that, we will keep all the cash generated by these businesses between now and closing, however long that takes and we know at the top of everyone's mind is use of proceeds. I get that, but given that this transaction will take between 12 and 15 months to close, we're not going to start spending money that isn't ours.





So the EUR10.6 billion or the $13 billion is kind of how this transaction was built up. So, there's been some dueling enterprise values out there and I try to indicate in my remarks, as we get that, but if you believe that 10.6 billion or EUR10.8 billion that we and both Vodafone reported, that is the cash proceeds figure after all debt is accounted for, Jeff, and all taxes and I'll tell you that at this point, we view -- we think there will be no cash taxes owed on this transaction. We get to that EUR19 billion by simply adding as GAAP accounting requires us to do, the various liabilities in the transaction and that is EUR19 billion. So everybody's got their approach to it. That's fine. The main figure here is we agree on the net proceeds, so you can build up the enterprise value as you choose, we did it on a GAAP basis and that's how we got to 19, which is 11.5 times 2017 operating cash flow. But the EUR10.6 billion figure is after all debt is either assumed in Germany and therefore reduced from the 19 or already repaid we're delivering to Eastern European assets debt free, so that is the number.


I’ll repeat what I said in the remarks, the deal won't be done for over a year. So if you can tell us where stocks and interest rates and market multiples will be 12, 15 months from now, I'll tell you what we'll do with the capital, but I can assure you we have no deals in the queue that require any capital, so there's nothing for us to announce. There's no big transactions spending. There's nothing we even have our eye on that would require capital. And I think as you know and I have already indicated, buybacks are a big part of what we do. We've already bought back half this company in the last ten years and at today's price, where it is right now, if this is where the stock was in a year, we'd probably use every penny of it to buy the stock back.

For the past 5 years,  the stock has gone no where. It actually declined 18% if you want to be exact, per google finance. It looks like Europe is just not a good environment for Cable compare to the US (Charter). Anyone else has a good explanation on why the stock hasn't gone anywhere? Is this going to be like MSFT stagnant years, where all metrics looks good but share price doesn't go anywhere?
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on May 10, 2018, 11:53:38 AM
Thanks colinwalt for the excerpts. I guess the 1 year delay is part of the reason stock went down. Investors don't want to wait 1 year for ca$h. Plus the whole company sale is off the table.
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on May 10, 2018, 12:29:21 PM
Maybe they could buy O2 UK from Telefonica? Fries seems really convinced about fixed/mobile convergence.

I think the stock price reflects
- overall distrust in management (hides problems, super promotional, missed guidance)
- deal uncertainty and length (EU regulator)
- they're scaling down which is the opposite of what they've been saying is key to their business model all along.
- they're selling the crown jewel (Germany) which was their highest growing asset and if you ask me the better run country in Europe
- they've announced troubles ahead in Switzerland (and even tried to exit that market all together... before actually doubling down. that's reassuring.)
- now they're saying they are having troubles in Belgium
- Ziggo is still undisclosed but was bleeding left and right last time we were allowed to check
- I imagine that once you start displaying this pattern of exiting when things just get too hard it might encourage the incumbents to compete very hard and be irrational for a few years just to get Liberty out of their country.
...

Seems to me like they're cornered and retreating back into the most "American" of the European markets, the UK.
I wonder if political beliefs might be influencing Malone as well here. He's always been a very rational dealmaker in the past but knowing that he listens to Fox News and supports Trump makes me wonder just how much fake crap is in his head (imaginary no go zones, islamophobia, fear of "socialism"...).
All that said I think the price they've gotten from Vodafone is really good (makes me wonder what they were asking for in 2015) and it proves that the value of their assets on the private market is significantly higher than what the stock price reflects. An organized retreat at high prices might just be the best thing to do for shareholders.

Now the million dollar question is to calculate the value of New Liberty Global "ex Vodafone".
If we assumed the deal happens, how much are we paying for the rest of the company in terms of EV/EBITDA?
Title: Re: LBTYA - Liberty Global
Post by: smathew on May 10, 2018, 04:08:43 PM
"he listens to Fox News"

Don't forget that he was  a co-founder .
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on May 10, 2018, 04:37:14 PM
Yep.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on May 10, 2018, 06:07:56 PM
"he listens to Fox News"

Don't forget that he was  a co-founder .

^ LOL.

I think Europe is just not as good of a market for cable than the US. I found the idea that overall the ARPU in Europe will converge toward the US levels intriguing, but it just doesn’t work. sometimes, that’s  just the way it is, things work different in different part of the work. Same with banking which is a good business in the US, but at terrible one in Europe, because NIM in Europe are much lower.
Title: Re: LBTYA - Liberty Global
Post by: vince on May 11, 2018, 07:33:14 AM
"he listens to Fox News"

Don't forget that he was  a co-founder .

^ LOL.

I think Europe is just not as good of a market for cable than the US. I found the idea that overall the ARPU in Europe will converge toward the US levels intriguing, but it just doesn’t work. sometimes, that’s  just the way it is, things work different in different part of the work. Same with banking which is a good business in the US, but at terrible one in Europe, because NIM in Europe are much lower.

But yet, cable ebitda margins are higher-much higher in some cases-than in the United States.  To say Europe isnt as good a cable market, based on some recent challenges and stock price weakness, is shortsighted imo.  What good is high ARPU if you are only collecting it for the content providers? And having consumers get frustrated with the distributor in the process. 
Title: Re: LBTYA - Liberty Global
Post by: marazul on May 11, 2018, 07:40:27 AM
I think higher margins does not equal better business in this case. Content costs in Europe are minimal but so are ARPUs. Europe in general is more competitive for various reasons including: 1)Telcos were more aggressive with fiber build outs, 2) higher density makes copper infrastructure more efficient, 3) networks in many countries are opened for third parties to use, meaning there can be many competitors using 1 network, list goes on
Title: Re: LBTYA - Liberty Global
Post by: vince on May 11, 2018, 07:44:14 AM
By the way, did anyone catch that lbtya stock fell to roughly 5.5 times normal free cash flow after earnings release?  Thats assuming u net the cash that they are receiving(not the money that will be used to pay down debt)against the market cap.  Stock touched 22 billion and change. minus 13 billion in cash over 1.7 billion in new normal fcf.  And I can swear I heard Fries mention it in the call
Title: Re: LBTYA - Liberty Global
Post by: vince on May 11, 2018, 08:09:16 AM
I think higher margins does not equal better business in this case. Content costs in Europe are minimal but so are ARPUs. Europe in general is more competitive for various reasons including: 1)Telcos were more aggressive with fiber build outs, 2) higher density makes copper infrastructure more efficient, 3) networks in many countries are opened for third parties to use, meaning there can be many competitors using 1 network, list goes on

By definition, if Europe was more competitive, it would show up in the ROIC's, better to prove your point with real numbers.  I'm not disagreeing with either of you, simply stating that margins are higher and margins are obviously crucial in ROIC's....Germany has over 60% ebitda margins.  And Saying that content costs in Europe are minimal but so are ARPU's is kind of saying exactly what I said.  I think you will find that the economics are very similar when you break it down properly instead of listing some bullets that may be true but dont affect the economics as much as you may think.
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on May 13, 2018, 01:30:41 AM
By the way, did anyone catch that lbtya stock fell to roughly 5.5 times normal free cash flow after earnings release?  Thats assuming u net the cash that they are receiving(not the money that will be used to pay down debt)against the market cap.  Stock touched 22 billion and change. minus 13 billion in cash over 1.7 billion in new normal fcf.  And I can swear I heard Fries mention it in the call

min 24': "As I just said, you know, we think at this price today right now you're valuing the rest of our stuff at 5 times, I'm a buyer."
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on May 13, 2018, 05:25:11 AM
By the way, did anyone catch that lbtya stock fell to roughly 5.5 times normal free cash flow after earnings release?  Thats assuming u net the cash that they are receiving(not the money that will be used to pay down debt)against the market cap.  Stock touched 22 billion and change. minus 13 billion in cash over 1.7 billion in new normal fcf.  And I can swear I heard Fries mention it in the call

min 24': "As I just said, you know, we think at this price today right now you're valuing the rest of our stuff at 5 times, I'm a buyer."

I think he is referring to cash flow, not free cash flow. The more interesting question is what would the multiple of EV to EBITDA look like post merger.

My rough calc: 810M shares x$29.5=$23.9B market cap+$43B debt~$67B EV. EBITDA =$7.5B$ (?)

Post merger: EV=$67B-$22.5B~$44.5B - $OCF 7.5B -$2B=$5.5B; EV/EBITDA ~8.1x

Most likely, there will be some taxes and probably some loss of synergies that make the numbers worse, but overall, this looks quite cheap. I am somewhat uncertain about this years OCF, since so much depends on exchange rates, which fluctuate quite a bit.
Title: Re: LBTYA - Liberty Global
Post by: vince on May 13, 2018, 08:38:12 AM
By the way, did anyone catch that lbtya stock fell to roughly 5.5 times normal free cash flow after earnings release?  Thats assuming u net the cash that they are receiving(not the money that will be used to pay down debt)against the market cap.  Stock touched 22 billion and change. minus 13 billion in cash over 1.7 billion in new normal fcf.  And I can swear I heard Fries mention it in the call

min 24': "As I just said, you know, we think at this price today right now you're valuing the rest of our stuff at 5 times, I'm a buyer."

I think he is referring to cash flow, not free cash flow. The more interesting question is what would the multiple of EV to EBITDA look like post merger.

My rough calc: 810M shares x$29.5=$23.9B market cap+$43B debt~$67B EV. EBITDA =$7.5B$ (?)

Post merger: EV=$67B-$22.5B~$44.5B - $OCF 7.5B -$2B=$5.5B; EV/EBITDA ~8.1x

Most likely, there will be some taxes and probably some loss of synergies that make the numbers worse, but overall, this looks quite cheap. I am somewhat uncertain about this years OCF, since so much depends on exchange rates, which fluctuate quite a bit.

I thought initially he was referring to cash flow but the number but the numbers dont add up.  And its interesting because I dont recall him ever using multiples of fcf to highlight the attractiveness of the stock.

Also, Ebitda is roughly 7.0 billion but that doesnt include their share of Ziggo's Ebitda which would add another 1.0 billion or so.  So if we add the normal fcf from Ziggo Ebitda (normal in this case is around 17% fcf margin that includes 20% normal capex) the stock is even cheaper
Title: Re: LBTYA - Liberty Global
Post by: cmlber on May 13, 2018, 05:23:38 PM
I think higher margins does not equal better business in this case. Content costs in Europe are minimal but so are ARPUs. Europe in general is more competitive for various reasons including: 1)Telcos were more aggressive with fiber build outs, 2) higher density makes copper infrastructure more efficient, 3) networks in many countries are opened for third parties to use, meaning there can be many competitors using 1 network, list goes on
By definition, if Europe was more competitive, it would show up in the ROIC's, better to prove your point with real numbers.

Vince, what ROIC do you estimate LBTYK is earning relative to Charter or Comcast?   

Cable in Europe is clearly an inferior business.  VDSL speeds are much more competitive and VDSL pricing is regulated to an extent through open access. 

So whereas Charter competes with a shitty unregulated AT&T DSL service, LBTYK competes with a not as fast, but good enough to work without issue for most of the population, BT that is forced to wholesale its network.
Title: Re: LBTYA - Liberty Global
Post by: vince on May 14, 2018, 08:37:50 AM
I think higher margins does not equal better business in this case. Content costs in Europe are minimal but so are ARPUs. Europe in general is more competitive for various reasons including: 1)Telcos were more aggressive with fiber build outs, 2) higher density makes copper infrastructure more efficient, 3) networks in many countries are opened for third parties to use, meaning there can be many competitors using 1 network, list goes on
By definition, if Europe was more competitive, it would show up in the ROIC's, better to prove your point with real numbers.

Vince, what ROIC do you estimate LBTYK is earning relative to Charter or Comcast?   

Cable in Europe is clearly an inferior business.  VDSL speeds are much more competitive and VDSL pricing is regulated to an extent through open access. 

So whereas Charter competes with a shitty unregulated AT&T DSL service, LBTYK competes with a not as fast, but good enough to work without issue for most of the population, BT that is forced to wholesale its network.

A quick calculation shows Lbtya around 12% and Chtr closer to 10% using Ebitda margins.  I'm sure there are adjustments to make, and Chtr is arguably underearning (part of the bull thesis is that Chtr is underpenetrated within their footprint) that could change those numbers somewhat but I think they will be very similar anyway. 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 21, 2018, 03:57:48 AM
https://www.barrons.com/articles/bill-gates-discloses-5-stake-in-liberty-global-1526678779
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on May 23, 2018, 01:21:10 AM
Global is selling the assets in areas where the governments are either not allowing or pricing is too low to provide a good return. As such , I suspect the western European assets in UK and Netherlands are going to provided more USA like returns. Unfortunately most of Europe is tied together and you have to look at country by country for the best deals. What will they do with all this cash ? Buy back shares or enter a new line of businesses?
Title: Re: LBTYA - Liberty Global
Post by: cameronfen on May 23, 2018, 04:36:50 AM
Global is selling the assets in areas where the governments are either not allowing or pricing is too low to provide a good return. As such , I suspect the western European assets in UK and Netherlands are going to provided more USA like returns. Unfortunately most of Europe is tied together and you have to look at country by country for the best deals. What will they do with all this cash ? Buy back shares or enter a new line of businesses?

Maybe I'm wrong but it looks like they are selling business' where they dont have good telecom and cable businesses combined.  But its just one data point (as well as Liberty Latin America puchase of CW). 
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on May 26, 2018, 07:38:43 AM
Why has LBTYA performed so poorly over the years? Their stock was at $20 in 2012 and has vastly underperformed indices or Us cable stocks. All the PP presentation look great LOL.
However, their organic growth was very mediocre overall, the Euro overall was weak against the USD, but they is only a small part of the story. I think the bigger issue is that they never generated the FCF that they predicted . back in h r Day of thr Virgin Media merger, they had Capex <20% of the revenues and predicted lower numbers going forward. Currently they are investing 30-35% of their revenues in Capex, so that clearly didn’t work out.

The deal so sell a significant amount of their business at a moderate premium to their current EV/EBITDA seems great, but what about taxes and what will they do with the proceeds. Something along the line LBTYA does not seem to work out. I would appreciate , if someone could provide some clues. I have looked at this stock many iof more over the years and ever owned it, as I have not been able to get a picture of he actual organic business performance, due to all the wheeling and dealing.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on May 26, 2018, 11:28:00 AM
If you look here - http://www.libertyglobal.com/ir-lg-share-cost-basis.html

There have been some significant dividends and split-offs to shareholders since 2012. One dividend even gave you an entire share for each one you owned.

On top of that add a potential undervaluation of the shares and converting 1/3 of the business to cash in the sale to Vodafone and it may in fact be an issue of valuation, although the management is quite highly compensated.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 28, 2018, 10:49:22 AM
Quote
One dividend even gave you an entire share for each one you owned.

Isn't that a stock split?
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on May 28, 2018, 01:50:13 PM
Right...so if the stock price was $20 then and $20 now, and you got an extra share, I would imagine one could see it as being worth $40 to you.

Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 28, 2018, 03:47:11 PM
Right...so if the stock price was $20 then and $20 now, and you got an extra share, I would imagine one could see it as being worth $40 to you.

Depends if the figures that were used were split-adjusted or not was my point. They usually are. A quick look at Yahoo Finance shows that the stock indeed split in March 2014, and that the $20 price in 2012 was split adjusted.

Having a quick look at the past 10 years on RF, seems like between the summer of 2009 and the summer of 2015, the stock had a CAGR of 32%. Impressive. But from mid-2009 to today, the CAGR is 13%.
Title: Re: LBTYA - Liberty Global
Post by: cmlber on May 28, 2018, 04:03:47 PM
Why has LBTYA performed so poorly over the years?

Virgin Media is the majority of the value at LBTYA (especially after the Vodafone deal), and most bull cases revolve around cable having pricing power.  The last year has tested that thesis for the UK.  Last year, ARPU didn't grow and volumes weren't that impressive.  They explained this by saying prior mgmt got too aggressive trying to raise prices twice in one year (reasonable argument).  But then they fixed that and still, if you look at last quarter, in order to show ARPU growth (of only ~2%), they basically didn't grow volume other than the new-build associated growth.  Now they explained this by saying the seasonality has changed because they used to take price at the same time as their competitors, but this year they took price in Q1 and competitors took price in Q2.  That sounds like a reasonable explanation to me, so Q2 will be a big test, if it's a seasonality issue, they should grow ARPU 2% and have very good volume growth.  If volume growth doesn't accelerate than you have to seriously question whether customers just don't care about the difference between 75Mbps and 300Mbps. 

The Swiss market has also performed much worse because Salt/Sunrise have been pricing quad plays irrationally which forced Swisscom to respond.  Compare the new Salt quad play offer to Liberty's offer.  Idk why anyone would take a Liberty product in that part of the market.  But it's only available in ~30% of the market and they Liberty will likely buy Sunrise which would remove one irrational competitor.

Those are the two biggest issues that come to mind.
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 29, 2018, 06:14:46 AM
https://twitter.com/stockjock84/status/1001436199234473984

https://twitter.com/stockjock84/status/1001436480546529281
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on May 29, 2018, 01:02:33 PM
Thank you for sharing, Liberty  :)
Title: Re: LBTYA - Liberty Global
Post by: Liberty on May 29, 2018, 02:18:47 PM
https://www.digitaltveurope.com/2018/05/29/virgin-media-buys-casey-cablevision/
Title: Re: LBTYA - Liberty Global
Post by: Astrea on June 01, 2018, 08:28:57 AM
Michael Fries bought ~$2.8m worth of LBTYA on the open market on 30 May it would seem...

https://www.sec.gov/cgi-bin/own-disp?action=getowner&CIK=0001058725



Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on June 01, 2018, 11:14:45 PM
It is usually a safe bet that when a depressed stock turns one third of its operating assets to cash and deleverages, it could be a good store of value, even giving some tailwinds to the remaining business. I sold some puts October at 22.5, it seems like a conservative return is possible with little downside risk other than owning more look thru cash even cheaper if the deal closes or just a very cheap if it doesn't.
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on June 26, 2018, 08:09:34 AM
very cheap here

Liberty Global is buying $2B of stock this year...likely they haven't been buying recently, is this might be the blackout period?

After the deal closes, mgmt will use proceeds to buy more stock.  I don't see why the market doesn't appreciate the Vodafone deal?

Is Switzerland so much of a drag that buying 10% of the stock back means nothing?
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on June 26, 2018, 08:58:00 AM
What if the deal is not approved by German regulators? Are they stuck with the asset without a buyer ever?
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on June 26, 2018, 09:02:00 AM
What if the deal is not approved by German regulators? Are they stuck with the asset without a buyer ever?

That is certainly possible but I would think that if LBTY broke up the sale into different pieces, they could do sell to different buyers? 

From what I understand, nearly every country functions like its own region.  For this reason, there has been less leverage in Swiss assets despite proximity to other assets. 
Title: Re: LBTYA - Liberty Global
Post by: Liberty on June 28, 2018, 08:30:17 AM
LBTYA is trading at levels last seen in 2012... Anybody left to capitulate?
Title: Re: LBTYA - Liberty Global
Post by: Jurgis on June 28, 2018, 08:39:49 AM
LBTYA is trading at levels last seen in 2012... Anybody left to capitulate?

Me.  8)
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on June 28, 2018, 09:03:50 AM
digging deeper might be best move over time?

an analyst came out saying the stock should trade at $26/sh because the UK revenues will no longer grow

It's very possible that revenues do not continue to grow after the Vodafone deal, but from here, the company's free cash flow should increase relative to revenues since most if not all of the pieces are in place

Liberty is also buying an Irish cable co, which is subscale to its current operations

That said, I've seen managers dig into the stock when it's cheap to see if fall another 20%...

Title: Re: LBTYA - Liberty Global
Post by: HalfMeasure on June 28, 2018, 09:26:20 AM
Given the asset sale, how are you guys looking at LBTYA?
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on June 28, 2018, 12:39:57 PM
Bird's eye view: Liberty is selling 20% of its revenues (including the VodafoneZiggo JV) for net proceeds greater than 50% of its market cap.  Liberty is also keeping all cash flow from these businesses until closing...

The deal doesn't close for another year and since many investors have troubling thinking a few months ahead, a year might be an eternity. 

Lumping together in the Austria DT deal with the Vodafone one might be helpful for quick figures to see what's going

Liberty is selling a group of businesses that have grown sales from $3.36B in 2015 to $3.79B in 2017, or 4% sales growth per year on average. 

As a whole, Liberty has grown sales by only 2% per year (averaging 3 years and subtracting Netherlands)...clearly, the businesses being sold were a large part of the firms greater revenue growth.

The UK/Ireland business might be somewhat misunderstood, though rear-view mirror shows declining profitability and lower sales.  Belgium, on the other hand, has done very well.  Switzerland is subscale and possibly more of a problem maybe they figure it out or do a deal. 

Yes, as the analyst argues, sales are likely to decline. 

Taking this view is not constructive nor does it hold water because it doesn't take into account the broader context. 

Net proceeds from the Vodafone sale are expected to be roughly net proceeds of $12.7B USD (not including Austria). 

Austria is a TEV $2.2B deal.  I can't seem to find what net proceeds look like for this deal, but considering how little Austria contributes to the bottom-line, my guess is that piece of the business does not have cash flows that provide great coverage; that said, 10K seems to only show UPC debt w/o Austria broken out?  Does anyone have an actual number?

On the last call, Fries has indicated that should the stock be where it is today at closing, "every penny" will go to buybacks. 

At the end of Q1, Liberty bought back $480m of shares.  We'll see what the next Q looks like, but it's likely that the buyback was a similar figure since this year, the board has approved $2B of buyback. 

After Austria closes (this year), it would only make sense for Liberty to increase the buyback this year to match last year's? 

At $27/sh, Liberty Global trades at a $21.5B market cap...before the $12.7B of net proceeds (a large piece of which will likely be used for buyback should the stock remain depressed), Liberty will buy back roughly 8% of its market cap AND be earning money...
Title: Re: LBTYA - Liberty Global
Post by: vince on June 28, 2018, 02:10:06 PM
digging deeper might be best move over time?

an analyst came out saying the stock should trade at $26/sh because the UK revenues will no longer grow

It's very possible that revenues do not continue to grow after the Vodafone deal, but from here, the company's free cash flow should increase relative to revenues since most if not all of the pieces are in place

Liberty is also buying an Irish cable co, which is subscale to its current operations

That said, I've seen managers dig into the stock when it's cheap to see if fall another 20%...
pray to god it falls another 20 percent and stays there
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on August 10, 2018, 07:32:20 AM
Last quarter results were crappy. Again, lack of FCF, slow growth, more share buybacks. Hovering around 5x EBITDA debt, which is high, given the lack of FCF. Why invest in LBTYA when you can buy CHTR for a similar valuation and CMCSA even cheaper?
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on August 11, 2018, 12:46:49 AM
Would one be wrong in thinking that European regulators have resulted in higher percentage of capital spending and lower potential or cap on consumer broadband costs ? After this sale , global is mostly UK and a few western European small countries and poland.
I'm also seeing Gates investment vehicle cascade owns 5 percent of this. I think it's like a piggyback. It is unlikely to go much lower but it also may not go up dramatically either until more time passed , new deals or buybacks materialize.
Title: Re: LBTYA - Liberty Global
Post by: thefatbaboon on August 11, 2018, 01:30:55 AM
The whole Global thesis revolves on how you interpret the capex in the UK.  They are spending all their cash flow building out there, adding 4%-5% households for the last few years and intend to do so for the next 5. Meanwhile they are getting negligible arpu growth and homes past are only 38% penetrated...and what they do manage to build out doesnt immediately add that much to rgu growth as it takes time to ramp marketing and wait for the involuntary churn to favor the gravity of a superior product. 

I feel the jury is still out, there is no damning evidence in the numbers that disprove the liberty management thesis. In 5 years time  Project lightening might have increased homes passed 30% to 17m homes, gotten speeds up to 1GB, all at a time when 5G and IOT and AR/VR makes the dense network and high speeds very desirable to consumers allowing penetration to climb toward 45%-50%.  That could easily mean 60% RGU growth compared to today with capex needs collapsing, and thats without without any arpu/pricing. Thats a lot of fcf.

Its worth noting though for dollar investors that global will be almost totally exposed to sterling.
Title: Re: LBTYA - Liberty Global
Post by: vince on August 11, 2018, 10:18:46 AM
Last quarter results were crappy. Again, lack of FCF, slow growth, more share buybacks. Hovering around 5x EBITDA debt, which is high, given the lack of FCF. Why invest in LBTYA when you can buy CHTR for a similar valuation and CMCSA even cheaper?

Spek, can you please show how lbtya is more expensive(pro forma for asset sales) than chtr or cmcsa?
Title: Re: LBTYA - Liberty Global
Post by: cameronfen on August 11, 2018, 01:31:25 PM
Last quarter results were crappy. Again, lack of FCF, slow growth, more share buybacks. Hovering around 5x EBITDA debt, which is high, given the lack of FCF. Why invest in LBTYA when you can buy CHTR for a similar valuation and CMCSA even cheaper?

Spek, can you please show how lbtya is more expensive(pro forma for asset sales) than chtr or cmcsa?

I can't speak for spek but cmcsa is trading at something like 8x EV EBITDA which is cheaper than the 10x for CHTR and LBTYA.  The benefit of owning charter is that earnings are set to increase a lot as they integrate there acquisitions (and also pivot away from video). 
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on August 12, 2018, 06:07:18 AM
Last quarter results were crappy. Again, lack of FCF, slow growth, more share buybacks. Hovering around 5x EBITDA debt, which is high, given the lack of FCF. Why invest in LBTYA when you can buy CHTR for a similar valuation and CMCSA even cheaper?

Spek, can you please show how lbtya is more expensive(pro forma for asset sales) than chtr or cmcsa?

Yes, that’s how I see it. CMCSA (albeit not totally comparable) is cheaper than LBTYA and CHTR’s valuation is about the same, yet  CHTR has better organic growth and more importantly much lower Capex and higher FCF for the next few years probably.

Europe has more competition from the telecom operators, which brings returns down, IMO.

I can't speak for spek but cmcsa is trading at something like 8x EV EBITDA which is cheaper than the 10x for CHTR and LBTYA.  The benefit of owning charter is that earnings are set to increase a lot as they integrate there acquisitions (and also pivot away from video).
Title: Re: LBTYA - Liberty Global
Post by: cmlber on August 12, 2018, 02:32:46 PM
Last quarter results were crappy. Again, lack of FCF, slow growth, more share buybacks. Hovering around 5x EBITDA debt, which is high, given the lack of FCF. Why invest in LBTYA when you can buy CHTR for a similar valuation and CMCSA even cheaper?

Spek, can you please show how lbtya is more expensive(pro forma for asset sales) than chtr or cmcsa?

Yes, that’s how I see it. CMCSA (albeit not totally comparable) is cheaper than LBTYA and CHTR’s valuation is about the same, yet  CHTR has better organic growth and more importantly much lower Capex and higher FCF for the next few years probably.

Europe has more competition from the telecom operators, which brings returns down, IMO.

I can't speak for spek but cmcsa is trading at something like 8x EV EBITDA which is cheaper than the 10x for CHTR and LBTYA.  The benefit of owning charter is that earnings are set to increase a lot as they integrate there acquisitions (and also pivot away from video).

LBTYA is not trading at 10x EBITDA.  Not sure what numbers you're looking at, but you may be ignoring the look-through EBITDA of the Netherlands JV and not valuing the public equity stakes.  It's <8x EV/EBITDA on an aggregate basis, but they are selling 1/4 of the business at 11x, so the leftover (Virgin Media) is much cheaper. They only have 37% broadband penetration in the UK (compare to CHTR/CMCSA at 45-50%) and price points are lower than BT for substantially faster speeds.  And they don't have to defend the video contribution from OTT.

Another way to look at it is you're paying $20.5Bn for the equity today.  They have $1.2Bn left on the buyback + $12.2Bn that can be used to buyback stock if/when the Germany deal closes.  They also own a stake in Telenet which is publicly traded.

So you can think of it as getting the equity in UPC Switzerland ($1Bn OCF) for free and 50% of Vodafone/Ziggo (distributing $400MM/year) for free and paying $3.5Bn for the equity in Virgin Media, or a ~$20Bn EV for Virgin Media, which was purchased 5 years ago for a $23.3Bn EV.  Even adjusted for the depreciation of the pound OCF at Virgin is 10% higher since then, the footprint has expanded, and the speed is more important for consumers.
Title: Re: LBTYA - Liberty Global
Post by: vince on August 12, 2018, 02:57:35 PM
Last quarter results were crappy. Again, lack of FCF, slow growth, more share buybacks. Hovering around 5x EBITDA debt, which is high, given the lack of FCF. Why invest in LBTYA when you can buy CHTR for a similar valuation and CMCSA even cheaper?

Spek, can you please show how lbtya is more expensive(pro forma for asset sales) than chtr or cmcsa?

Also, on a fcf basis, lbtya is significantly cheaper than chtr and cmcsa pro forma the asset sale

Yes, that’s how I see it. CMCSA (albeit not totally comparable) is cheaper than LBTYA and CHTR’s valuation is about the same, yet  CHTR has better organic growth and more importantly much lower Capex and higher FCF for the next few years probably.

Europe has more competition from the telecom operators, which brings returns down, IMO.

I can't speak for spek but cmcsa is trading at something like 8x EV EBITDA which is cheaper than the 10x for CHTR and LBTYA.  The benefit of owning charter is that earnings are set to increase a lot as they integrate there acquisitions (and also pivot away from video).

LBTYA is not trading at 10x EBITDA.  Not sure what numbers you're looking at, but you may be ignoring the look-through EBITDA of the Netherlands JV and not valuing the public equity stakes.  It's <8x EV/EBITDA on an aggregate basis, but they are selling 1/4 of the business at 11x, so the leftover (Virgin Media) is much cheaper. They only have 37% broadband penetration in the UK (compare to CHTR/CMCSA at 45-50%) and price points are lower than BT for substantially faster speeds.  And they don't have to defend the video contribution from OTT.

Another way to look at it is you're paying $20.5Bn for the equity today.  They have $1.2Bn left on the buyback + $12.2Bn that can be used to buyback stock if/when the Germany deal closes.  They also own a stake in Telenet which is publicly traded.

So you can think of it as getting the equity in UPC Switzerland ($1Bn OCF) for free and 50% of Vodafone/Ziggo (distributing $400MM/year) for free and paying $3.5Bn for the equity in Virgin Media, or a ~$20Bn EV for Virgin Media, which was purchased 5 years ago for a $23.3Bn EV.  Even adjusted for the depreciation of the pound OCF at Virgin is 10% higher since then, the footprint has expanded, and the speed is more important for consumers.
Title: Re: LBTYA - Liberty Global
Post by: vince on August 12, 2018, 03:05:57 PM
Last quarter results were crappy. Again, lack of FCF, slow growth, more share buybacks. Hovering around 5x EBITDA debt, which is high, given the lack of FCF. Why invest in LBTYA when you can buy CHTR for a similar valuation and CMCSA even cheaper?

Spek, can you please show how lbtya is more expensive(pro forma for asset sales) than chtr or cmcsa?

Also, on a fcf basis, lbtya is significantly cheaper than chtr and cmcsa pro forma the asset sale

Yes, that’s how I see it. CMCSA (albeit not totally comparable) is cheaper than LBTYA and CHTR’s valuation is about the same, yet  CHTR has better organic growth and more importantly much lower Capex and higher FCF for the next few years probably.

Europe has more competition from the telecom operators, which brings returns down, IMO.

I can't speak for spek but cmcsa is trading at something like 8x EV EBITDA which is cheaper than the 10x for CHTR and LBTYA.  The benefit of owning charter is that earnings are set to increase a lot as they integrate there acquisitions (and also pivot away from video).

LBTYA is not trading at 10x EBITDA.  Not sure what numbers you're looking at, but you may be ignoring the look-through EBITDA of the Netherlands JV and not valuing the public equity stakes.  It's <8x EV/EBITDA on an aggregate basis, but they are selling 1/4 of the business at 11x, so the leftover (Virgin Media) is much cheaper. They only have 37% broadband penetration in the UK (compare to CHTR/CMCSA at 45-50%) and price points are lower than BT for substantially faster speeds.  And they don't have to defend the video contribution from OTT.

Another way to look at it is you're paying $20.5Bn for the equity today.  They have $1.2Bn left on the buyback + $12.2Bn that can be used to buyback stock if/when the Germany deal closes.  They also own a stake in Telenet which is publicly traded.

So you can think of it as getting the equity in UPC Switzerland ($1Bn OCF) for free and 50% of Vodafone/Ziggo (distributing $400MM/year) for free and paying $3.5Bn for the equity in Virgin Media, or a ~$20Bn EV for Virgin Media, which was purchased 5 years ago for a $23.3Bn EV.  Even adjusted for the depreciation of the pound OCF at Virgin is 10% higher since then, the footprint has expanded, and the speed is more important for consumers.
Also, on a fcf basis, and pro forma for asset sale, lbtya is significantly cheaper than chtr and cmcsa.  As a result, their buybacks are more accretive to the remaining shareholders.  Finally, they are more aggressive with the buyback.  So basically, if they do get a chance to use much of the proceeds at these low prices it wont even be close on a fcf basis.  I realize that there are a couple "if's" in there but that is my answer to your question as to why they are potentially a more attractive investment.
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on August 23, 2018, 03:14:36 PM
anyone have a sense as to the drop today other than general market pressures? seems like a big drop considering? maybe time to buy more?
Title: Re: LBTYA - Liberty Global
Post by: mwtorock on September 05, 2018, 10:28:29 AM
i am reading a IB upgrade note that says Virgin Media is seeing steady market share gains, rising ARPU and low churn. Anyone from UK or EU can comment about that?

it is not that obvious from recent market survey data i read, so i am not sure which one is right...
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on September 05, 2018, 12:11:45 PM
i am reading a IB upgrade note that says Virgin Media is seeing steady market share gains, rising ARPU and low churn. Anyone from UK or EU can comment about that?

it is not that obvious from recent market survey data i read, so i am not sure which one is right...
what does survey data suggest?
Title: Re: LBTYA - Liberty Global
Post by: mwtorock on September 05, 2018, 12:34:54 PM
BT market share increases with Virgin basically flat and Sky and TalkTalk shrinking. also the ARPU of Virgin customers around 40 pounds per month, which is quite different than 51 pounds Virgin Media reports. it might be skewed by cable only subscribers.
Title: Re: LBTYA - Liberty Global
Post by: vince on September 14, 2018, 02:33:16 PM
 This is Mike Fries on most recent presentation.  He seems to be very conservative when doing the sum of the parts analysis to the point of error.  For instance he says that Telenet and Ziggo would fetch 8 dollars a share or roughly 6 billion which sounds awfully low considering the market cap of telenet and any which way u want to look at Ziggo.  Even the cash per share is a little low by my calculations and his adding up of all the pieces is more than stock price.  I don't get it.                                                                                                                                                             
   "We think we've been pretty good capital allocators over the years. If I look at the M&A side, this is where I get a bit frustrated, if I look at a place like Germany, where we got over 6x our money on that investment. If I look at Telenet, pretty popular stock these days, $50 -- EUR 50 stock. Our basis in that is negative 2. We put about 20 in. We're taking 22 out in dividends. So Switzerland and the U.K. have been great investments for us. My point being I think we're pretty good allocators of capital. Now having said that, if we're trading where we're trading today -- and the way I look at the math, we traded about 5.5x, because you've got $14, $15 of cash, you got these other assets in Telenet in Holland, let's say, that might add up to say, $8, something like that, which means Virgin and all the other EBITDA trades at about $6 and that's about, in our book, about 5.5x. We're probably going to lean into our stock at that point because I don't know that we're going to find a better deal than the one sitting in front of us, especially as we start to improve free cash flow and operating free cash flow combined and we look at returns on that basis".

Anyone share my confusion or have anything to add? Or maybe someone agrees with his math? 
Title: Re: LBTYA - Liberty Global
Post by: bigbluffzinc on September 14, 2018, 04:33:26 PM
Can't comment on all of it, but last I checked I think annualized results at Ziggo/Vod to Liberty would be around $985m of OIBDA....  Maybe I'm wrong (someone check?) but if not on this part I agree that the SOTP seems too conservative here...  Don't think it's likely this asset goes for anything close to what's implied there...

Edit* I checked pretty sure that's right...  So ~$5b leverage ~$5b to the equity is how I'd think about it....  57.4% of Telenet for ~$1b is wrong...  So yeah don't see how that works unless the multiple is way tighter than I would expect for Zig/Vod or I've missed something...
Title: Re: LBTYA - Liberty Global
Post by: AJDelphi on September 14, 2018, 05:37:09 PM
vince

Yea your math seems on to me. Telnet trades at about 6.8x EV/EBITDA now. They probably wouldn't sell it for less than 10x given the recent transactions.

At 10x for Telenet
That's about $8.50 per share Liberty value.

Ziggo's EBITDA is like $30 Mil more (adjusting for Liberty's 57% of EBITDA at Telenet, and 50% from Ziggo) at $985 million like bigbluffzinc said. So probably another $8.50 there.

$13.7 billion of cash for $17.73 per share.

That get's me to $34.73 per share. And now we have $4.1 billlion of EBITDA on $25.974 billion of Debt to work with for Virgin, continuing CEE, and Switzerland.

With the stock at $27 hopefully they are aggressive in they buyback like Fries is hinting at.

Title: Re: LBTYA - Liberty Global
Post by: bigbluffzinc on September 14, 2018, 05:52:28 PM
I thought it was understated (Ziggo + Telenet value) on the call by 50% too but it just seemed like such a big mistake that I thought I was wrong...
Title: Re: LBTYA - Liberty Global
Post by: vince on September 14, 2018, 06:41:30 PM
I get 12 billion or 15.50 a share in cash, 9-10 billion of value for Telenet and Ziggo or 12.50 per share and 10 times for remaining businesseswhich after debt gives us 15 billion or 20 dollars per share.  And to add a little more conservatism we have another 2 billion of buyback (mostly from cash flow) between end of 2nd qtr 2018 and sale of German asset. 
Title: Re: LBTYA - Liberty Global
Post by: AJDelphi on September 14, 2018, 06:57:30 PM
I get 12 billion or 15.50 a share in cash, 9-10 billion of value for Telenet and Ziggo or 12.50 per share and 10 times for remaining businesseswhich after debt gives us 15 billion or 20 dollars per share.  And to add a little more conservatism we have another 2 billion of buyback (mostly from cash flow) between end of 2nd qtr 2018 and sale of German asset.

Why $12 billion? Maybe just being conservative but wanted to check.

Liberty is getting $1.054 billion from the sale of Austria. And $12.7 billion from the Vodafone deal. Probably some additional costs there from the transactions but Liberty also gets the free cash flow from those assests until they close. Which should be something, maybe a few hundred million. What I might be missing is paying down debt which would explain why my numbers are a bit different.
Title: Re: LBTYA - Liberty Global
Post by: vince on September 14, 2018, 07:27:54 PM
My bad, u are more right than me AJ.  I just assumed maybe it was already spent on buybacks that would have brought the count to around 770 million shares as of July 31st (u can see the number on Liberty Global"s website under share info).  But after thinking about it a little I would probably just assume maybe another 1 billion of buybacks going forward. Either way, I believe your number is more accurate.
Title: Re: LBTYA - Liberty Global
Post by: vince on September 15, 2018, 08:57:02 AM
Just to clarify, I think AJ's cash per share number is probably more accurate than mine but I prefer the numbers I use for the value of Telenet and Ziggo.  Either way this investment has a high probability of great returns over the next 2-3 years.  And it really supports my view that when you have smart shareholder oriented control owners (Mallone), your ultimate results can be dramatically improved (relative to what results would have been) even when the business is under pressure.  How many other mgmt's do u see selling assets at high private values and then taking proceeds to buyback their equity at low prices?  Or constantly shedding assets or acquiring them depending on scale and shifting advantages? 
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on September 19, 2018, 06:44:51 AM
Horizon 4 to be rolled out in Switzerland first!  Likely a good idea given recent weakness there.

https://www.libertyglobal.com/wp-content/uploads/2018/09/Press-Release-Liberty-Global-launches-next-generation-entertainment-platform-Horizon-4.pdf
Title: Re: LBTYA - Liberty Global
Post by: ander on October 11, 2018, 09:10:03 AM
Any thoughts on below?

Analyst Actions: Liberty Global's Class A Shares' Price Target Cut by Berenberg to $25 From $26, Sell Maintained

06:22 AM EDT, 10/11/2018 (MT Newswires) -- Liberty Global(LBTYA) received a slight reduction to the price target for its Class A shares from Berenberg as the firm expressed concerns about the communications-and-entertainment company's future cash flows.

Berenberg's new price target on Liberty Global's(LBTYA) Class A shares is $25 per share, down from $26. The shares closed Wednesday's session at $25.17. Berenberg kept its investment rating on the stock at sell.

In its note to clients, Berenberg said "The crux of our sell case is that, after its disposals, Liberty Global(LBTYA) will be left in markets where broadband penetration is near saturation, price increases are becoming harder to execute and increasing ultrafast broadband rollout by competitors will erode its historical network advantage."

In turn, the firm said it is forecasting revenue declines in three of Liberty Global's(LBTYA) four continuing major markets in 2018: Switzerland, Belgium and the Netherlands.

Still, Berenberg noted, it expects Liberty's Q3 results in early November to show accelerating growth versus Q2 and anticipates the company's management will "highlight its new Horizon 4 TV set-top box as a source of churn reduction and growth."

The firm pointed to an adjusted free-cash-flow split between discontinued and continuing operations as "the main disappointment at Q2." It noted the company's 2018 guidance calls for $1.6 billion in free cash flow as it retains cash flows until the sale of its German, Hungarian, Romanian and Czech operations, expected mid-2019.

"However, there will now be increased scrutiny on how this is split," Berenberg added, noting it is forecasting $500 million of adjusted free cash flow from continuing operations in 2018, with $1.1 billion to come from discontinued businesses.

Title: Re: LBTYA - Liberty Global
Post by: Shooter MacGavin on October 11, 2018, 09:18:52 AM
Any thoughts on below?

Analyst Actions: Liberty Global's Class A Shares' Price Target Cut by Berenberg to $25 From $26, Sell Maintained

06:22 AM EDT, 10/11/2018 (MT Newswires) -- Liberty Global(LBTYA) received a slight reduction to the price target for its Class A shares from Berenberg as the firm expressed concerns about the communications-and-entertainment company's future cash flows.

Berenberg's new price target on Liberty Global's(LBTYA) Class A shares is $25 per share, down from $26. The shares closed Wednesday's session at $25.17. Berenberg kept its investment rating on the stock at sell.

In its note to clients, Berenberg said "The crux of our sell case is that, after its disposals, Liberty Global(LBTYA) will be left in markets where broadband penetration is near saturation, price increases are becoming harder to execute and increasing ultrafast broadband rollout by competitors will erode its historical network advantage."

In turn, the firm said it is forecasting revenue declines in three of Liberty Global's(LBTYA) four continuing major markets in 2018: Switzerland, Belgium and the Netherlands.

Still, Berenberg noted, it expects Liberty's Q3 results in early November to show accelerating growth versus Q2 and anticipates the company's management will "highlight its new Horizon 4 TV set-top box as a source of churn reduction and growth."

The firm pointed to an adjusted free-cash-flow split between discontinued and continuing operations as "the main disappointment at Q2." It noted the company's 2018 guidance calls for $1.6 billion in free cash flow as it retains cash flows until the sale of its German, Hungarian, Romanian and Czech operations, expected mid-2019.

"However, there will now be increased scrutiny on how this is split," Berenberg added, noting it is forecasting $500 million of adjusted free cash flow from continuing operations in 2018, with $1.1 billion to come from discontinued businesses.

yes, who's Berenberg and what is the point of cutting your price target by $1?  And why do you have a sell rating with a price target that is equal to the stock price?
Title: Re: LBTYA - Liberty Global
Post by: ander on October 11, 2018, 09:23:02 AM
To clarify. My question was thoughts re: ongoing FCF post-divestiture?
Title: Re: LBTYA - Liberty Global
Post by: LightWhale on October 11, 2018, 09:28:47 AM

why do you have a sell rating with a price target that is equal to the stock price?

because price targets are normally for 12 months from now. So 0% return is inferior to riskless 2.7% yield on US bonds for the same period.
Title: Re: LBTYA - Liberty Global
Post by: cameronfen on October 11, 2018, 09:41:34 AM
To clarify. My question was thoughts re: ongoing FCF post-divestiture?

I dont know that much but my thoughts are the remain markets liberty global is in are developed and saturated.  I dont know of ultrafast broadband will be a problem in Europe.  DSL providers lose share to liberty but I think they are still quite profitable in Europe. Either way Europe is behind Asia and USA in 5g roll out (which is what I assume is pushing ultrafast broadband as things like FIOS were kind of abandoned by Verizon for example) so you can wait and see how it effects players in those markets.  That being said, the report could be exactly right and liberty shareholders could still make a lot of money if they buyback 50% of the stock.  Even if the company is not growing, if 50% of the company is returned in cash to shareholders (not to mention buyback), I think shareholders still do relatively well. 
Title: Re: LBTYA - Liberty Global
Post by: vince on October 11, 2018, 10:01:12 AM
To clarify. My question was thoughts re: ongoing FCF post-divestiture?

Well he didnt adjust residual fcf for normal capex, and some margin enhancing activities in the pipeline.  Any which way you look at it, its cheap.  I dont understand how someone can say its worth 20 billion or less.  What, he cant count?
Title: Re: LBTYA - Liberty Global
Post by: maybe4less on October 11, 2018, 10:17:34 AM
To clarify. My question was thoughts re: ongoing FCF post-divestiture?

Well he didnt adjust residual fcf for normal capex, and some margin enhancing activities in the pipeline.  Any which way you look at it, its cheap.  I dont understand how someone can say its worth 20 billion or less.  What, he cant count?

Also funny how it doesn't mention that the fourth market of Remainco, which is as big as the other 3 combined, is projecting strong growth.  I guess that doesn't fit the thesis, so best not to report it?
Title: Re: LBTYA - Liberty Global
Post by: ander on October 26, 2018, 06:56:36 AM
Any thoughts on LBTYK impact if hard Brexit were to occur?

fyi - I'm a shareholder. I'm trying to think of ways where I could actually lose principal here.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on October 26, 2018, 03:02:12 PM
Any thoughts on LBTYK impact if hard Brexit were to occur?

fyi - I'm a shareholder. I'm trying to think of ways where I could actually lose principal here.

Brexit shouldn’t really have a major impact on its operations, since its run country by country. I think the main risk is they the GBP goes down when Britain tumbled into a recession and as someone noted, there is political risk with the Labor party veering left.
Title: Re: LBTYA - Liberty Global
Post by: no_free_lunch on October 26, 2018, 04:10:03 PM
Do those who know this space have an opinion on AT&T?  It's going for something like 9x earnings with a 7% yield.  Kind of cheap unless it is going out of business.  Obviously a very real risk of a value trap but there is some safety via the dividend.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on October 26, 2018, 05:04:15 PM
Do those who know this space have an opinion on AT&T?  It's going for something like 9x earnings with a 7% yield.  Kind of cheap unless it is going out of business.  Obviously a very real risk of a value trap but there is some safety via the dividend.

My main issues is they they have been terrible operators historically and many of their acquisitions have not performed. Direct TV is a dead man walking in the media landscape. While the TWC assets are pretty high quality, I am no sure they won’t manage to screw them up. I’d rather own something in the media business where management is proven to be strong, even if the stock is a bit more expensive. CMCSA is my main pick with CHTR a distant second.
Title: Re: LBTYA - Liberty Global
Post by: vince on November 07, 2018, 01:55:07 PM
 Just a quick look at qtr 3 results and I think it will go down as a huge opportunity missed for anyone not buying this stock, it actually touched 22.50 or 17 billion and change, lmao, receiving 12-13 billion in cash and ongoing substantial normalized earning power.  On the other hand their product performance still doesn't look impressive and they havent put together a couple of consecutive good qtrs of product, revenue, and earnings growth in years.  They have grown and are still growing every qtr so they deserve a decent multiple but Mike Fries performance has been atrocious imo and they absolutely do not deserve a premium multiple
Title: Re: LBTYA - Liberty Global
Post by: ander on November 10, 2018, 04:13:02 AM
Barrons article on Malone holdings today includes interview from him. Note the following on LBTYK:

“The market is skeptical that the deal will close and cautious about what the company will do with the cash if it closes,” Malone says. “Would I buy the stock here? Probably not. If the deal closes, Liberty Global is very cheap. If not, it’s appropriately priced.” Malone thinks the market is too cautious on regulatory approval. He puts an 80% chance of approval.

He sounds a little bit more skeptical of approval than I thought (especially if he’s saying 80% publicly my guess is that he really thinks likelihood of approval to be lower).

I guess another question would be if the deal falls apart how does the entity unlock value going forward.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on November 10, 2018, 06:46:39 AM
Barrons article on Malone holdings today includes interview from him. Note the following on LBTYK:

“The market is skeptical that the deal will close and cautious about what the company will do with the cash if it closes,” Malone says. “Would I buy the stock here? Probably not. If the deal closes, Liberty Global is very cheap. If not, it’s appropriately priced.” Malone thinks the market is too cautious on regulatory approval. He puts an 80% chance of approval.

He sounds a little bit more skeptical of approval than I thought (especially if he’s saying 80% publicly my guess is that he really thinks likelihood of approval to be lower).

I guess another question would be if the deal falls apart how does the entity unlock value going forward.

Seems more sceptical than I would think. Appropriately priced when the deal doesn’t go through isn’t the consensus here. But then again, we have almost 5x EBITDA/EV leverage and the last quarterly results were nothing to write home about (as usual). I do think it’s cheap, but I also think the chance that the deal does not go though is a bit higher than the consensus here.
Title: Re: LBTYA - Liberty Global
Post by: cmlber on November 10, 2018, 07:07:31 AM
Barrons article on Malone holdings today includes interview from him. Note the following on LBTYK:

“The market is skeptical that the deal will close and cautious about what the company will do with the cash if it closes,” Malone says. “Would I buy the stock here? Probably not. If the deal closes, Liberty Global is very cheap. If not, it’s appropriately priced.” Malone thinks the market is too cautious on regulatory approval. He puts an 80% chance of approval.

He sounds a little bit more skeptical of approval than I thought (especially if he’s saying 80% publicly my guess is that he really thinks likelihood of approval to be lower).

I guess another question would be if the deal falls apart how does the entity unlock value going forward.

Seems more sceptical than I would think. Appropriately priced when the deal doesn’t go through isn’t the consensus here. But then again, we have almost 5x EBITDA/EV leverage and the last quarterly results were nothing to write home about (as usual). I do think it’s cheap, but I also think the chance that the deal does not go though is a bit higher than the consensus here.

I'd take the "probably wouldn't buy" comment with a grain of salt.  I wouldn't expect John Malone, knowing there is a high chance LBTYK will be deploying $10-12 billion in buybacks on a sub $20 billion market cap in the near future, to do anything but talk down the value of the stock.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on November 10, 2018, 07:23:56 AM
Barrons article on Malone holdings today includes interview from him. Note the following on LBTYK:

“The market is skeptical that the deal will close and cautious about what the company will do with the cash if it closes,” Malone says. “Would I buy the stock here? Probably not. If the deal closes, Liberty Global is very cheap. If not, it’s appropriately priced.” Malone thinks the market is too cautious on regulatory approval. He puts an 80% chance of approval.

He sounds a little bit more skeptical of approval than I thought (especially if he’s saying 80% publicly my guess is that he really thinks likelihood of approval to be lower).

I guess another question would be if the deal falls apart how does the entity unlock value going forward.

Seems more sceptical than I would think. Appropriately priced when the deal doesn’t go through isn’t the consensus here. But then again, we have almost 5x EBITDA/EV leverage and the last quarterly results were nothing to write home about (as usual). I do think it’s cheap, but I also think the chance that the deal does not go though is a bit higher than the consensus here.

I'd take the "probably wouldn't buy" comment with a grain of salt.  I wouldn't expect John Malone, knowing there is a high chance LBTYK will be deploying $10-12 billion in buybacks on a sub $20 billion market cap in the near future, to do anything but talk down the value of the stock.

True, he has a habit of talking his book. However, I haven’t seen any recent purchases from Malone, or did I miss them?
Title: Re: LBTYA - Liberty Global
Post by: bigbluffzinc on November 10, 2018, 09:02:18 AM
I read through the article too.  Doesn't make much sense to me. 80% chance deal goes through.. if deal goes through stock is cheap.. (my inference is 80% chance stock is cheap).. conclusion is "don't buy the stock"..   :o

Title: Re: LBTYA - Liberty Global
Post by: vince on November 10, 2018, 09:32:46 AM
I read through the article too.  Doesn't make much sense to me. 80% chance deal goes through.. if deal goes through stock is cheap.. (my inference is 80% chance stock is cheap).. conclusion is "don't buy the stock"..   :o

I couldn't agree more, it makes no sense.  Maybe the author wrote it down wrong, who knows....but if there is 80% chance of a very cheap stock and a 20% chance of a fairly valued stock, that makes for a good-great investment.  Even the ratio makes no sense, how can the attractiveness of the stock fall so steeply, its not like they are getting a once in a lifetime valuation for Germany.  I actually think they sold their best asset, rather they should have sold that british asset where if they raise the price from 50 dollars (thats a complete bundle folks) to 50.50 they have to keep an eye on churn.  My opinion is that the CEO is crap and the assets are being undermanaged.  If you read the transcripts closely you will see what I am talking about, Fries is not equipped to manage a national european cable business, its that simple.
Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on November 10, 2018, 09:38:40 AM
I read the article and find Malone's comments confusing at best and disingenuous at worst. Especially the part where he says "Would I buy the stock here? Probably not."

Liberty Global has been buying back a ton of stock at higher prices than the current price and Malone controls it. On the other hand he may be right when he says it is fairly priced if the Vodaphone deal doesn't go through because they are getting a pretty hefty premium for the assets.
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on November 10, 2018, 10:49:59 AM
The comment makes no sense.  If it's worth more with a deal then by definition the value with no deal has to be a lot lower than the price today - unless the market is pricing 100% chance of no deal happening (which seems highly unlikely).
Title: Re: LBTYA - Liberty Global
Post by: maybe4less on November 10, 2018, 11:59:15 AM
Barrons article on Malone holdings today includes interview from him. Note the following on LBTYK:

“The market is skeptical that the deal will close and cautious about what the company will do with the cash if it closes,” Malone says. “Would I buy the stock here? Probably not. If the deal closes, Liberty Global is very cheap. If not, it’s appropriately priced.” Malone thinks the market is too cautious on regulatory approval. He puts an 80% chance of approval.

He sounds a little bit more skeptical of approval than I thought (especially if he’s saying 80% publicly my guess is that he really thinks likelihood of approval to be lower).

I guess another question would be if the deal falls apart how does the entity unlock value going forward.

Seems more sceptical than I would think. Appropriately priced when the deal doesn’t go through isn’t the consensus here. But then again, we have almost 5x EBITDA/EV leverage and the last quarterly results were nothing to write home about (as usual). I do think it’s cheap, but I also think the chance that the deal does not go though is a bit higher than the consensus here.

I'd take the "probably wouldn't buy" comment with a grain of salt.  I wouldn't expect John Malone, knowing there is a high chance LBTYK will be deploying $10-12 billion in buybacks on a sub $20 billion market cap in the near future, to do anything but talk down the value of the stock.

Yeah sounds like he wants to buyback a ton of stock.
Title: Re: LBTYA - Liberty Global
Post by: vince on November 10, 2018, 03:44:55 PM
  I dont see the relationship between what he said and his motivation for keeping the stock price down.  If the deal goes through, people are gonna buy the stock, and he is telling them its really cheap if the deal goes through.  How is he going to benefit?  You mean he is talking the stock down now? But he isnt buying any, and lbtya isnt buying an unusual amount.  Why in gods name do they not just do a forward purchase or whatever to get as much stock now, and pay for it later?  And please note that when Malone says he wouldnt buy it, he has a very different return threshold than most other investors....I wouldn't touch it either if I were him
Title: Re: LBTYA - Liberty Global
Post by: cmlber on November 10, 2018, 04:58:19 PM
  I dont see the relationship between what he said and his motivation for keeping the stock price down.  If the deal goes through, people are gonna buy the stock, and he is telling them its really cheap if the deal goes through.  How is he going to benefit?  You mean he is talking the stock down now? But he isnt buying any, and lbtya isnt buying an unusual amount.  Why in gods name do they not just do a forward purchase or whatever to get as much stock now, and pay for it later?  And please note that when Malone says he wouldnt buy it, he has a very different return threshold than most other investors....I wouldn't touch it either if I were him

“In terms of what we may or may not do going forward on buybacks, I’m not going to mention anything here. You correctly point out there’s lots of tools, there’s lots of opportunities to look at it.
Suffice it to say you should expect, since we’re some of the more sophisticated players in that space, that we are looking at all things.”

Wouldn’t be surprised to see them buy back more aggressively before the deal closes.  And still a year until deal closes, so even the usual $2-2.5B pace is a huge chunk of the equity.
Title: Re: LBTYA - Liberty Global
Post by: ander on November 11, 2018, 04:56:40 AM
I’d actually be surprised if they did move more aggressively re: share buybacks before the deal closes unless the odds change dramatically for deal closure (for example, maybe during the time period between approval and closure). And I would expect the stock pops like 10% or something on deal approval which would still be an insanely attractive price level to do buybacks.
Title: Re: LBTYA - Liberty Global
Post by: maybe4less on November 11, 2018, 09:35:38 PM
I’d actually be surprised if they did move more aggressively re: share buybacks before the deal closes unless the odds change dramatically for deal closure (for example, maybe during the time period between approval and closure). And I would expect the stock pops like 10% or something on deal approval which would still be an insanely attractive price level to do buybacks.

Exactly. Malone absolutely wants the price near its current levels when the deal closes.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on November 12, 2018, 02:22:30 AM
Think of the deal as a deleveraging. If they don't buy back the debt, then the funds are not deleveraging the remaining debt. As rates rise, and you have less business, clearly what the CEO was saying at the call makes sense. Wait and see. If debt cost goes too high they'll deleverage, if it doesn't, well wreckless as it may be to continue to leverage up it may benefit the shareholders converting equity to debt. A slow leveraged buyout. Alot will depend on rates and business results.
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on November 12, 2018, 09:24:58 AM
80% is certainly a fungible number and my thought was the probability of closing was higher

from another view, the 20% difference might feel like 50% and it could be that investors misjudge to the downside

that said, if the sale is blocked, the stock might go up b/c liberty keeps some really nice assets...if the sale goes through, nearly $12B goes to buyback as we watch Switzerland (hopefully) turn the corner

net-net, at these levels, I don't see why owning more isn't a good idea?
Title: Re: LBTYA - Liberty Global
Post by: ander on November 12, 2018, 10:15:45 AM
80% is certainly a fungible number and my thought was the probability of closing was higher

from another view, the 20% difference might feel like 50% and it could be that investors misjudge to the downside

that said, if the sale is blocked, the stock might go up b/c liberty keeps some really nice assets...if the sale goes through, nearly $12B goes to buyback as we watch Switzerland (hopefully) turn the corner

net-net, at these levels, I don't see why owning more isn't a good idea?

I agree and at these levels I continue to top-up my position. It's just that my approach is conservative and assume the worse case (i.e., deal not closing) - in that case I still see upside at these price levels.
Title: Re: LBTYA - Liberty Global
Post by: bigbluffzinc on November 12, 2018, 11:05:51 AM
Does anyone know (done any correlation work with other UK businesses) how much of this is Brexit?  I know it's been mentioned before but don't think there was much of a response.  Sterling has held up pretty well while LBTYK has taken it on the chin & I don't see this business as particularly vulnerable (particularly with the optionality if the deal closes) to a deteriorating domestic situation in the UK but I can't really see material business deterioration ex-Brexit either.  I initiated at $26-$27 and have been adding but I don't want to miss something obvious either...   

Obviously funds betting on a bigger VOD deal/buyout/speculating if Brian missed Sky he may do something with LBTYK are going to have to unwind & that can bring the opportunity.  But given the magnitude of the decline I'm concerned I've missed something...  After re-reading the 10Q's/transcripts I don't see what & would love (hate...) to have someone point out the magnitude of Brexit/etc & why this is a disaster.  I know Howard Marks said levels in the UK are still too high to make anything (debt) investable but I don't have any numbers.   :( 

I am actually on the other side of just about everyone on this forum and think Fries is an "ok" and relatively transparent CEO.  I think Belgium and Switzerland really are tough markets but I think he's done a decent job of exiting/partnering to build scale when he's disadvantaged and working out solutions & Virgin Media is a slam dunk. 

I agree that he's sold the companies best asset but I do think he got a reasonable price for it and I don't think the rest of the company was/is being valued appropriately and it's reasonable to assume selling at a fair price to arbitrage the value gap between public/private is an "ok" strategy.  I'm probably too cynical but I'm skeptical about whether people would think so poorly of him if the stock price was $37-$40 USD with no fundamental change to the business... 
Title: Re: LBTYA - Liberty Global
Post by: vince on November 12, 2018, 12:13:30 PM
Does anyone know (done any correlation work with other UK businesses) how much of this is Brexit?  I know it's been mentioned before but don't think there was much of a response.  Sterling has held up pretty well while LBTYK has taken it on the chin & I don't see this business as particularly vulnerable (particularly with the optionality if the deal closes) to a deteriorating domestic situation in the UK but I can't really see material business deterioration ex-Brexit either.  I initiated at $26-$27 and have been adding but I don't want to miss something obvious either...   

Obviously funds betting on a bigger VOD deal/buyout/speculating if Brian missed Sky he may do something with LBTYK are going to have to unwind & that can bring the opportunity.  But given the magnitude of the decline I'm concerned I've missed something...  After re-reading the 10Q's/transcripts I don't see what & would love (hate...) to have someone point out the magnitude of Brexit/etc & why this is a disaster.  I know Howard Marks said levels in the UK are still too high to make anything (debt) investable but I don't have any numbers.   :( 

I am actually on the other side of just about everyone on this forum and think Fries is an "ok" and relatively transparent CEO.  I think Belgium and Switzerland really are tough markets but I think he's done a decent job of exiting/partnering to build scale when he's disadvantaged and working out solutions & Virgin Media is a slam dunk. 

I agree that he's sold the companies best asset but I do think he got a reasonable price for it and I don't think the rest of the company was/is being valued appropriately and it's reasonable to assume selling at a fair price to arbitrage the value gap between public/private is an "ok" strategy.  I'm probably too cynical but I'm skeptical about whether people would think so poorly of him if the stock price was $37-$40 USD with no fundamental change to the business...

I should have been clearer when I was criticizing Fries.....he/they have done a great job buying/selling/arbitraging/buybacks, no question, but his execution with operations has been atrocious, especially if you compare to a well run cable operation.  His propensity to brag and his overconfidence in aggressive targets that he made a couple years ago have come back to bite him hard.  The stock would not have fallen this far if investors didn't lose trust in him...you can tell he's just deceiving/full of shit when he talks, constantly overhyping potential positives and completely glossing over any negatives, constantly spinning nonsense.  Look at his results on their commercial business, how late he was to identify that as a huge opportunity.  Always putting down his American peers, or trying to justify their underperformance against say Chtr, even when nobody asked specifically about that. I mean the company has grown rebased cash flows every qtr for a decade (this is more because of the advantaged assets rather than mgmt execution and would have grown faster with say Rutledge running things imo) and the stock is selling like its going under (which by itself does not bother me, have owned it for 5 years and I am in the negative).....and mgmt is a big reason.  He overpromised and underdelivered, and that is a big problem for a public company, nobody can argue against that last point, it's a fact.
Title: Re: LBTYA - Liberty Global
Post by: bigbluffzinc on November 13, 2018, 05:55:59 PM
Yeah ok fair enough.  I don't disagree with anything you said.  :)

Klarman picked up a 3.5% position or so this last quarter.  Not a big deal but good news nonetheless. 
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on November 13, 2018, 08:20:33 PM
Does anyone know (done any correlation work with other UK businesses) how much of this is Brexit?  I know it's been mentioned before but don't think there was much of a response.  Sterling has held up pretty well while LBTYK has taken it on the chin & I don't see this business as particularly vulnerable (particularly with the optionality if the deal closes) to a deteriorating domestic situation in the UK but I can't really see material business deterioration ex-Brexit either.  I initiated at $26-$27 and have been adding but I don't want to miss something obvious either...   

Obviously funds betting on a bigger VOD deal/buyout/speculating if Brian missed Sky he may do something with LBTYK are going to have to unwind & that can bring the opportunity.  But given the magnitude of the decline I'm concerned I've missed something...  After re-reading the 10Q's/transcripts I don't see what & would love (hate...) to have someone point out the magnitude of Brexit/etc & why this is a disaster.  I know Howard Marks said levels in the UK are still too high to make anything (debt) investable but I don't have any numbers.   :( 

I am actually on the other side of just about everyone on this forum and think Fries is an "ok" and relatively transparent CEO.  I think Belgium and Switzerland really are tough markets but I think he's done a decent job of exiting/partnering to build scale when he's disadvantaged and working out solutions & Virgin Media is a slam dunk. 

I agree that he's sold the companies best asset but I do think he got a reasonable price for it and I don't think the rest of the company was/is being valued appropriately and it's reasonable to assume selling at a fair price to arbitrage the value gap between public/private is an "ok" strategy.  I'm probably too cynical but I'm skeptical about whether people would think so poorly of him if the stock price was $37-$40 USD with no fundamental change to the business...

I should have been clearer when I was criticizing Fries.....he/they have done a great job buying/selling/arbitraging/buybacks, no question, but his execution with operations has been atrocious, especially if you compare to a well run cable operation.  His propensity to brag and his overconfidence in aggressive targets that he made a couple years ago have come back to bite him hard.  The stock would not have fallen this far if investors didn't lose trust in him...you can tell he's just deceiving/full of shit when he talks, constantly overhyping potential positives and completely glossing over any negatives, constantly spinning nonsense.  Look at his results on their commercial business, how late he was to identify that as a huge opportunity.  Always putting down his American peers, or trying to justify their underperformance against say Chtr, even when nobody asked specifically about that. I mean the company has grown rebased cash flows every qtr for a decade (this is more because of the advantaged assets rather than mgmt execution and would have grown faster with say Rutledge running things imo) and the stock is selling like its going under (which by itself does not bother me, have owned it for 5 years and I am in the negative).....and mgmt is a big reason.  He overpromised and underdelivered, and that is a big problem for a public company, nobody can argue against that last point, it's a fact.

Yes, that’s it in a nutshell. I also believe that running a cable business in Europe is much harder than in the US - the economics are just not as good, because pricing is lower.
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on November 14, 2018, 07:51:43 AM
Spek it's funny because that's exactly the reason that Fries et al. gave as the opportunity many years ago.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on November 14, 2018, 08:53:20 AM
Spek it's funny because that's exactly the reason that Fries et al. gave as the opportunity many years ago.

I know this, but here we are a few years later and the situation is still the same. No surprise, since you can watch satellite TV for free in Europe. I think Broadband internet, which is still lacking in many regions, is there best shot. The national telecoms however are willing to hit hard on pricing before  conceding market share.
Title: Re: LBTYA - Liberty Global
Post by: ander on November 15, 2018, 05:51:32 AM
CNBC full interview w/ Malone - at 27:30 Malone goes into detail re: thoughts on Liberty Global / Europe

https://www.cnbc.com/video/2018/11/14/watch-cnbcs-full-exclusive-interview-with-liberty-media-chairman-john-malone.html

Title: Re: LBTYA - Liberty Global
Post by: vince on November 15, 2018, 07:58:51 AM
Yeah ok fair enough.  I don't disagree with anything you said.  :)

Klarman picked up a 3.5% position or so this last quarter.  Not a big deal but good news nonetheless.

Are you accounting for a's and k's in Klarmans purchases of liberty global?
Title: Re: LBTYA - Liberty Global
Post by: vince on November 15, 2018, 08:00:37 AM
Nevermind, I got it
Title: Re: LBTYA - Liberty Global
Post by: vince on November 22, 2018, 03:30:14 PM
Lbtya shares outstanding as of October 31st are down to roughly 755 million
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on November 22, 2018, 04:54:06 PM
It seems about right. I have them at 754 million as of September 30th in the Q3 10-k

             shares  %
2017 q3 832     
        q4 821     -1.32
2018 q1 798     -2.80
        q2 770     -3.51
        q3 754     -2.08

annualized rhythm: -9.71%
Title: Re: LBTYA - Liberty Global
Post by: vince on December 05, 2018, 11:00:27 PM
Lots of good info in liberty globals latest presentation at ubs....lots of good questions for sure.  We will see soon enough whether Fries is really full shit or only half full.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on January 10, 2019, 08:09:31 AM
Looks like we've breached the 20 bucks barrier.
Is EU review to cash out part of their business in q1 or q2?
I also wonder if their funding is in euros or pounds, both of which carry significantly lower interest expense than us dollars.
Title: Re: LBTYA - Liberty Global
Post by: undervalued on January 10, 2019, 08:46:39 AM
I wonder why this keeps sinking. Is the market pricing the deal will not go through? How does one calculate the percentage chance of the deal will go through or not?
Title: Re: LBTYA - Liberty Global
Post by: ander on January 10, 2019, 09:42:03 AM
The timeline for EU review is mid-2019. Below is from the press release on 12/11/18 quoting Mike Fries. My guess is things weighing down the stock include Brexit fears, deal closing uncertainty, maybe some questions related to positioning in a 5G world. In terms of probability of closing, I think at this point it's substantially undervalued even if the deal does not close.

"This is welcome and expected news from the European Commission. We always anticipated a second phase review given the size and scope of the transaction, and it is clear that the EU is retaining regulatory authority over the case. This provides us with the appropriate forum to demonstrate the consumer benefits that will be delivered by the creation of fully converged, fixed-mobile operators in these four markets. We look forward to engaging with the Commission and continue to expect approval mid-2019.”
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on January 10, 2019, 09:49:34 AM
Wonder if it's more related to Brexit uncertainty and the impact on the UK economy given post-deal the Virgin business will be the majority of cash flow.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on January 10, 2019, 09:54:09 AM
Presumably they can jack up prices if currency is devalued. It seems pretty sticky to supply internet bandwidth whatever happens.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on January 10, 2019, 10:08:16 AM
Presumably they can jack up prices if currency is devalued. It seems pretty sticky to supply internet bandwidth whatever happens.

I doubt they can raise the prices because the GBP goes down against the USD. Why does it matter for a domestic business? They probably can raise prices if inflation in Britain picks up. The currency risk is real however.
Title: Re: LBTYA - Liberty Global
Post by: ander on January 10, 2019, 10:49:54 AM
I agree with Spek. If you’re a USD investor the investment is worth less but does not explain current price. I’d like to see some insider buying at these levels as well.
Title: Re: LBTYA - Liberty Global
Post by: undervalued on January 10, 2019, 10:52:03 AM
I agree with Spek. If you’re a USD investor the investment is worth less but does not explain current price. I’d like to see some insider buying at these levels as well.

In the UBS interview, Fries said he is a net buyer of stock. I don't see him buying any stocks in the open market in the last 12 months? At least not visible from Yahoo Finance.
Title: Re: LBTYA - Liberty Global
Post by: khturbo on January 10, 2019, 11:10:43 AM
On twitter someone mentioned that management might be guiding down expectations for Virgin Media:

https://twitter.com/THValueCap/status/1083428189836402688
Title: Re: LBTYA - Liberty Global
Post by: ander on January 10, 2019, 01:46:20 PM
He bought about $3 million on May 30th at ~$29.


I agree with Spek. If you’re a USD investor the investment is worth less but does not explain current price. I’d like to see some insider buying at these levels as well.

In the UBS interview, Fries said he is a net buyer of stock. I don't see him buying any stocks in the open market in the last 12 months? At least not visible from Yahoo Finance.
Title: Re: LBTYA - Liberty Global
Post by: ander on January 10, 2019, 01:47:42 PM
On twitter someone mentioned that management might be guiding down expectations for Virgin Media:

https://twitter.com/THValueCap/status/1083428189836402688

Thx for sharing. They don't report until End of Feb / beginning of Mar1. Will be interesting to see if any analyst research notes pick up on it.
Title: Re: LBTYA - Liberty Global
Post by: maybe4less on January 10, 2019, 01:49:54 PM
On twitter someone mentioned that management might be guiding down expectations for Virgin Media:

https://twitter.com/THValueCap/status/1083428189836402688

I spoke with IR about this and there are two items that were mentioned: 1) a one-time 28M pound telco tax increase in 2019 and 2) the renewals of the BT Sports and Sky Sports contracts where fees will jump up somewhere in the mid-high single digits.

Doesn't seem so bad...
Title: Re: LBTYA - Liberty Global
Post by: ander on January 10, 2019, 04:33:12 PM
On twitter someone mentioned that management might be guiding down expectations for Virgin Media:

https://twitter.com/THValueCap/status/1083428189836402688

I spoke with IR about this and there are two items that were mentioned: 1) a one-time 28M pound telco tax increase in 2019 and 2) the renewals of the BT Sports and Sky Sports contracts where fees will jump up somewhere in the mid-high single digits.

Doesn't seem so bad...

1) Is that 1 time $28 million extra payment or a 1-time increase in perpetuity -- if it's the latter that's worth a few hundred million reduction in value and 2) any idea how much they were paying for BT Sports and Sky Sports?

Thx.
Title: Re: LBTYA - Liberty Global
Post by: maybe4less on January 10, 2019, 09:59:53 PM
On twitter someone mentioned that management might be guiding down expectations for Virgin Media:

https://twitter.com/THValueCap/status/1083428189836402688

I spoke with IR about this and there are two items that were mentioned: 1) a one-time 28M pound telco tax increase in 2019 and 2) the renewals of the BT Sports and Sky Sports contracts where fees will jump up somewhere in the mid-high single digits.

Doesn't seem so bad...

1) Is that 1 time $28 million extra payment or a 1-time increase in perpetuity -- if it's the latter that's worth a few hundred million reduction in value and 2) any idea how much they were paying for BT Sports and Sky Sports?

Thx.

It's a little complicated, but basically 3 years ago the British government revalued all networks in the country to fair market value in order to update assessments of this tax, which is basically like a property tax. After the updated valuation exercise, Virgin Media owed 140M more pounds each year in tax.

However, they didn't have to pay the increase in year 1, it is phased in over five years. Last year the increase was 18M pounds and this year it was 28M pounds for whatever reason. So a "surprise" increase of 8M more pounds.

We have 42M pounds of increases to go over the next two years and then the government isn't schedule to revalue the network for another five years.

This has actually all been outlined in the fixed income filings for Virgin, so not sure why it is such a surprise.

Not sure how much they've been paying BT and Sky for the sports, but this also should be a surprise as these contracts come up for renewal on a schedule and typically increase by similar amounts.

I guess this is a long way of saying I don't think this is the reason that the stock has declined.
 
Title: Re: LBTYA - Liberty Global
Post by: Sunrider on January 20, 2019, 08:06:47 AM
Apologies if this has been covered at length much earlier, I only re-read the discussion back to October.

I've had a brief look at the last Q and the results announcement and at today's market cap of ca. $17bn, I see this is essentially as a Greenblat stub. If the $10bn Vodafone cash receipts go purely to paying down debt, then stub value should increase by ca. 58%, which ignores the other ca. $8bn debt, which seem to be moved with the sold entities. Putting that in, the stub value should increase by a shade over a 100%.

I understand that they are highly levered like all Malone companies, and I've not read enough of the Q to figure out the $EBITDA that goes with the sold businesses, vs. what remains (I think the announcement mentioned it's ca. 28% of OCF).

Yet, presuming the other markets don't turn into a complete dog's breakfast, this seems very very cheap.

What am I getting wrong/missing here?

Thank you.

Title: Re: LBTYA - Liberty Global
Post by: rolling on January 20, 2019, 08:29:47 AM


What am I getting wrong/missing here?

Thank you.
As an european my answer is: likelihood of the deal not going through. I've been looking at this but stayed out for that reason. My uninformed guess is that it is much more likely a no than a yes
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on January 20, 2019, 08:45:14 AM


What am I getting wrong/missing here?

Thank you.
As an european my answer is: likelihood of the deal not going through. I've been looking at this but stayed out for that reason. My uninformed guess is that it is much more likely a no than a yes

I agree, the deal not going though - at least not to the extend envisioned, is quite high. The regulators in Europe have a lot of teeth and there are assets in a lot of different countries involved. It feels like it’s priced in though, but my experience tells me that it almost never is.
Title: Re: LBTYA - Liberty Global
Post by: khturbo on January 20, 2019, 09:52:28 AM
Ya I agree this is a straight up merger arb stock at this point and I'm sure it will continue trading like it has until we get resolution on the deal.
Title: Re: LBTYA - Liberty Global
Post by: cameronfen on January 20, 2019, 10:25:48 AM
Apologies if this has been covered at length much earlier, I only re-read the discussion back to October.

I've had a brief look at the last Q and the results announcement and at today's market cap of ca. $17bn, I see this is essentially as a Greenblat stub. If the $10bn Vodafone cash receipts go purely to paying down debt, then stub value should increase by ca. 58%, which ignores the other ca. $8bn debt, which seem to be moved with the sold entities. Putting that in, the stub value should increase by a shade over a 100%.

I understand that they are highly levered like all Malone companies, and I've not read enough of the Q to figure out the $EBITDA that goes with the sold businesses, vs. what remains (I think the announcement mentioned it's ca. 28% of OCF).

Yet, presuming the other markets don't turn into a complete dog's breakfast, this seems very very cheap.

What am I getting wrong/missing here?

Thank you.

For one the merger isn't a done deal.  It could fail for anti-trust reasons and that's a significant probability
Title: Re: LBTYA - Liberty Global
Post by: cmlber on January 20, 2019, 01:09:44 PM
As an european my answer is: likelihood of the deal not going through. I've been looking at this but stayed out for that reason. My uninformed guess is that it is much more likely a no than a yes

Why do you think it's much more likely a no than a yes?  What's different about this merger than the Vodafone Ziggo merger which was approved by the European Commission just 2 years ago? 
Title: Re: LBTYA - Liberty Global
Post by: rolling on January 20, 2019, 02:29:54 PM
As an european my answer is: likelihood of the deal not going through. I've been looking at this but stayed out for that reason. My uninformed guess is that it is much more likely a no than a yes

Why do you think it's much more likely a no than a yes?  What's different about this merger than the Vodafone Ziggo merger which was approved by the European Commission just 2 years ago?
As I said, my guess is very little informed. Regulators over here tend to overregulate. The difference I see is in size: this is a much bigger deal and vodafone isn't getting smaller. It might happen, but I wouldn't put it at 50-50 (and 50-50 is too big a risk for me)
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on January 20, 2019, 03:00:46 PM
Does anyone know if Vodafone has to pay the break up fee (1/4 billion Euros!) if the deal fails because of the regulator or only if it's by their own fault?

Ps: Maybe I'm being naive but I don't think either Liberty's or Vodafone's management/lawyers would have moved forward with the deal if they didn't think the chances of approval were significantly higher than 50/50 - and they have so much more experience than us about EU regulations.
Title: Re: LBTYA - Liberty Global
Post by: cmlber on January 20, 2019, 04:51:50 PM
As an european my answer is: likelihood of the deal not going through. I've been looking at this but stayed out for that reason. My uninformed guess is that it is much more likely a no than a yes

Why do you think it's much more likely a no than a yes?  What's different about this merger than the Vodafone Ziggo merger which was approved by the European Commission just 2 years ago?
As I said, my guess is very little informed. Regulators over here tend to overregulate. The difference I see is in size: this is a much bigger deal and vodafone isn't getting smaller. It might happen, but I wouldn't put it at 50-50 (and 50-50 is too big a risk for me)

It's not a "much" bigger deal.  Ziggo was valued at 14 billion euro in the approved Netherlands merger, compared to the current assets being sold at an 18.4 billion euro value. Both are fixed-mobile deals, there isn't any overlap where households would have previously had two cable options and now would have one. 

Title: Re: LBTYA - Liberty Global
Post by: Sunrider on January 20, 2019, 09:25:36 PM
Thank you all.

I suppose the next question is, if the deal were to fail, then what should this highly levered Malone controlled, but Fries managed, company trade-at?
Title: Re: LBTYA - Liberty Global
Post by: skanjete on January 21, 2019, 12:24:03 AM
I think I heard Malone in his last interview mention a 80% chance of the deal going through.
Of course, I suppose he will be somewhat biased as well.
Title: Re: LBTYA - Liberty Global
Post by: vince on January 21, 2019, 09:21:35 AM
Does anyone know if Vodafone has to pay the break up fee (1/4 billion Euros!) if the deal fails because of the regulator or only if it's by their own fault?

Ps: Maybe I'm being naive but I don't think either Liberty's or Vodafone's management/lawyers would have moved forward with the deal if they didn't think the chances of approval were significantly higher than 50/50 - and they have so much more experience than us about EU regulations.

This is the right way to think about it imo, therefore I think chances are greater than 50-50. 
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on January 22, 2019, 09:01:27 AM
If they were allowed to buy Germany, why aren't they allowed to sell it ? Did the 10 years plus they held it make it such a monopoly over this period ?
Title: Re: LBTYA - Liberty Global
Post by: walkie518 on January 22, 2019, 10:58:05 AM
Does anyone know if Vodafone has to pay the break up fee (1/4 billion Euros!) if the deal fails because of the regulator or only if it's by their own fault?

Ps: Maybe I'm being naive but I don't think either Liberty's or Vodafone's management/lawyers would have moved forward with the deal if they didn't think the chances of approval were significantly higher than 50/50 - and they have so much more experience than us about EU regulations.

This is the right way to think about it imo, therefore I think chances are greater than 50-50.
In a recent interview, I believe Malone pegged closing at 80%
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on February 03, 2019, 04:17:53 PM
"Sunrise in talks to buy Liberty’s Swiss cable arm" -Financial Times
https://www.ft.com/content/1da14148-266a-11e9-8ce6-5db4543da632
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on February 27, 2019, 03:38:34 PM
Full year results out.  https://2zn23x1nwzzj494slw48aylw-wpengine.netdna-ssl.com/wp-content/uploads/2019/02/Liberty-Global-Q4-2018-Press-Release.pdf

Sale of Switzerland is great news given the horrible results from that region.  Decent price given customer trends.  Very positive to see that they still expect Germany to close by mid year.  UK was "meh".  Definitely slowing growth and I cant imagine they are hitting their capex return numbers for Lightning expansion.

If the sales close (and everything today points to that outcome) this is still ridiculously cheap.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on February 27, 2019, 03:49:12 PM
https://www.libertyglobal.com/wp-content/uploads/2019/02/Liberty-Global-plc-Q4-2018-Investor-Call-Presentation.pdf

Can someone help me reconcile page 7 and 18?

I see pro-forma they are saying continuing operations will generate FCF of 550 to 600 million a year. The Slide 7 says proceeds of $20 a share, so is something like $20/share + ~10x OCF (~2.6 billion 2019) = 26 billion / 742 million shares = $35 share + $20 share = $55 / share? Or am I double counting the proceeds which will reduce debt outstanding so it's just the Multiple of OCF of the remaining operations? They say FCF is 550m to 600m in 2019 so I'm not sure if I'm understanding why they value it on OCF and not FCF basis. I used the 10x OCF because that's what the other pieces sold for.

Title: Re: LBTYA - Liberty Global
Post by: dwy000 on February 27, 2019, 05:38:24 PM
https://www.libertyglobal.com/wp-content/uploads/2019/02/Liberty-Global-plc-Q4-2018-Investor-Call-Presentation.pdf

Can someone help me reconcile page 7 and 18?

I see pro-forma they are saying continuing operations will generate FCF of 550 to 600 million a year. The Slide 7 says proceeds of $20 a share, so is something like $20/share + ~10x OCF (~2.6 billion 2019) = 26 billion / 742 million shares = $35 share + $20 share = $55 / share? Or am I double counting the proceeds which will reduce debt outstanding so it's just the Multiple of OCF of the remaining operations? They say FCF is 550m to 600m in 2019 so I'm not sure if I'm understanding why they value it on OCF and not FCF basis. I used the 10x OCF because that's what the other pieces sold for.

Isn't OCF from continuing operations $4.4bn ($5.2bn less $750 for Switzerland, excludes Ziggo and excludes the $189 they add back for TSA on page 17)?  At 10x that is $44bn of enterprise value.  Add in the $15bn of cash from sale to Vodafone = $59bn.  Add $2bn for cash from Switzerland sale = $61bn.  There's $20bn of debt post sales ($30bn - $6bn going with UPC sale - $4bn going with Switzerland).   

So $61bn enterprise value less $20bn of debt = $41bn equity value.  That's $55/share.  Add in 50% of equity value of Ziggo, add in the cash they retain prior to sales, other dribs and drabs.  Subtract out the 40% of Telnet they don't own. 
 = pretty good vs. $25/share today.

10x OCF is a sale value so you'd expect it to trade below that but back of the envelope shows there's a ton of value above today's price.
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on February 27, 2019, 10:11:34 PM
Sounds about right. I would replace the ~$20 cash (yes with a "~" because writing down 19 (15+2+2) would have been just too hard ><) proceeds per share claimed by Fries on slide 7 by $17/s instead because I don't know that adding their "tax assets" in there makes any sense. And as Dwy000 pointed out I wouldn't necessarily use a 10X OCF multiple for valuing continuing operations, although that seems to be the private market value and for all we know they could keep selling off other parts of the company.

Another way to think about it is that when the stock bottomed out a couple months ago around $20/share the market cap was at 15B yet they're about to get 15B of cash proceeds.

What I do not understand is why they go to such length in making a sum of the parts valuation for us which highlights the low stock price if they're about to buy back tons of shares. The only rational to want a stronger stock price is if they're about to embark in something else really big using the money + some equity (please don't!!!). I though Malone did a great job at acting cold about LBTYA during his last public interview which convinced me further they wanted a cheap price for the buybacks. Lastly, I don't understand announcing that you're about to significantly cut down on investment capex right when you're courting the EU regulators. Maybe Fries is just pathologically promotional and can't help himself...
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on February 28, 2019, 01:42:18 AM
Belgium seems just as bad as Switzerland and with majority shares in a public stock, can easily sell that too I guess. Not suretheir plans for telnet. They say it produces fcf growth but declining volumes of revenues and customers.

Another thing of curiosity for me is that data customers does not equal houses passed. Does this mean there is still only less than 50% of broadband subscribers in relation to total households? That seems strange as most households would take the data no doubt? I can't imagine why it's not 100%, although even at Charter it's not 100%. It'd be interesting to compare penetration of data in Europe versus USA.

But my estimate of value is a bit lower.
I take the $20 in cash proceeds and $4 telnet as on their charts and I add a 15x FCF multiple to the 550m they claim as the remaining FCF and that's $11/share + $20/share + 4/share = $35/share FV.
Of course the FCF is clouded by very large capex swings and if it will go down, then this will get more valuable. To me the difference between OCF and FCF is just huge for the remaining assets. Something like 23% conversion of OCF to FCF...I attribute this to capex right? The above figure is for 2019 already with the 20% reduced capex. If we use the 600m figure we get $36/share.

Anyway can someone point out why this number is too low? Do cable/broadband operators trade more on OCF than FCF because FCF is very shifty due to the large cycles of investment and then 'reaping what you harvest'? Do they trade higher when in the high FCF phase or does the market see through the cycle?
Or too high?




Title: Re: LBTYA - Liberty Global
Post by: Astrea on February 28, 2019, 03:42:31 AM
Sounds about right. I would replace the ~$20 cash (yes with a "~" because writing down 19 (15+2+2) would have been just too hard ><) proceeds per share claimed by Fries on slide 7 by $17/s instead because I don't know that adding their "tax assets" in there makes any sense. A

Isn't it 15bn in cash divided by 742m shares outstanding which produces $20/share?
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on February 28, 2019, 03:55:06 AM
Sounds about right. I would replace the ~$20 cash (yes with a "~" because writing down 19 (15+2+2) would have been just too hard ><) proceeds per share claimed by Fries on slide 7 by $17/s instead because I don't know that adding their "tax assets" in there makes any sense. A

Isn't it 15bn in cash divided by 742m shares outstanding which produces $20/share?

My bad, you're totally right. Should have read the fine lines at the bottom of the page, thanks for pointing it out.
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on February 28, 2019, 07:09:13 AM
Belgium seems just as bad as Switzerland and with majority shares in a public stock, can easily sell that too I guess. Not suretheir plans for telnet. They say it produces fcf growth but declining volumes of revenues and customers.

Another thing of curiosity for me is that data customers does not equal houses passed. Does this mean there is still only less than 50% of broadband subscribers in relation to total households? That seems strange as most households would take the data no doubt? I can't imagine why it's not 100%, although even at Charter it's not 100%. It'd be interesting to compare penetration of data in Europe versus USA.

But my estimate of value is a bit lower.
I take the $20 in cash proceeds and $4 telnet as on their charts and I add a 15x FCF multiple to the 550m they claim as the remaining FCF and that's $11/share + $20/share + 4/share = $35/share FV.
Of course the FCF is clouded by very large capex swings and if it will go down, then this will get more valuable. To me the difference between OCF and FCF is just huge for the remaining assets. Something like 23% conversion of OCF to FCF...I attribute this to capex right? The above figure is for 2019 already with the 20% reduced capex. If we use the 600m figure we get $36/share.

Anyway can someone point out why this number is too low? Do cable/broadband operators trade more on OCF than FCF because FCF is very shifty due to the large cycles of investment and then 'reaping what you harvest'? Do they trade higher when in the high FCF phase or does the market see through the cycle?
Or too high?
Yeah, Belgium top line and customers aren't pretty either! But at least cash flow there is improving strongly as they move onto their own network.

Homes passed is just the number of homes where Virgin products are available. There is still a lot of competition in the UK.  The whole play of Lightning was to offer the fastest data speeds available and it takes a long time to get customers to switch over once built. I think they were targeting 30% penetration in justifying the Lightning spend (someone correct me there if I misspoke).

In difference between OCF and FCF, dont forget to subtract interest expense as well as capex (and taxes). With $20bn of debt, that's a lot of interest to cover.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on February 28, 2019, 07:59:47 AM
Right,. So capex is the key. Capex for growth, or if no growth , low capex and high fcf. I think I see a bit of the European socialist mentality here. Make them spend ...then still don't let them recover their investment. Although it could also be too much competition but still someone had to put in the money.

Today I saw this line, made me laugh , "Freenet, a German telecommunications and web content provider, concluded that Malone was getting too good a deal." )

With a name like freenet, you can tell what they stand for.
Title: Re: LBTYA - Liberty Global
Post by: Foreign Tuffett on February 28, 2019, 09:39:15 AM
Adjusted for the asset sales, publicly-traded subsidiaries, and minority interests, the go-forward company looks to be trading at somewhere between 5 and 6X EV/OCF. That seems like an attractive price given that Virgin Media, which is (I think?) the best part of the company, comprises the bulk of their remaining assets.

Mike Freeze French Fries Frieza Fries probably isn't the genius CEO everyone thought he was several years ago when John Malone called him "probably the best CEO I know", but I think he is both competent and shareholder friendly.

Linked below is a good Seeking Alpha article that just came out this morning.

https://seekingalpha.com/article/4245158-liberty-global-sunrise-deal-might-still-fail (https://seekingalpha.com/article/4245158-liberty-global-sunrise-deal-might-still-fail)

Title: Re: LBTYA - Liberty Global
Post by: vince on March 02, 2019, 10:35:17 AM
Adjusted for the asset sales, publicly-traded subsidiaries, and minority interests, the go-forward company looks to be trading at somewhere between 5 and 6X EV/OCF. That seems like an attractive price given that Virgin Media, which is (I think?) the best part of the company, comprises the bulk of their remaining assets.

Mike Freeze French Fries Frieza Fries probably isn't the genius CEO everyone thought he was several years ago when John Malone called him "probably the best CEO I know", but I think he is both competent and shareholder friendly.

Linked below is a good Seeking Alpha article that just came out this morning.

https://seekingalpha.com/article/4245158-liberty-global-sunrise-deal-might-still-fail (https://seekingalpha.com/article/4245158-liberty-global-sunrise-deal-might-still-fail)

On slide 7 of the earnings presentation it shows that they have 19 billion of cash and they claim that 742 million shares outstanding equals 20 dollars per share.  Now maybe i'm crazy and i have listened to lots of horse shit from these guys for almost 5 years now but those numbers dont add up.  What am i missing?
Title: Re: LBTYA - Liberty Global
Post by: vince on March 02, 2019, 10:42:37 AM
Adjusted for the asset sales, publicly-traded subsidiaries, and minority interests, the go-forward company looks to be trading at somewhere between 5 and 6X EV/OCF. That seems like an attractive price given that Virgin Media, which is (I think?) the best part of the company, comprises the bulk of their remaining assets.

Mike Freeze French Fries Frieza Fries probably isn't the genius CEO everyone thought he was several years ago when John Malone called him "probably the best CEO I know", but I think he is both competent and shareholder friendly.

Linked below is a good Seeking Alpha article that just came out this morning.

https://seekingalpha.com/article/4245158-liberty-global-sunrise-deal-might-still-fail (https://seekingalpha.com/article/4245158-liberty-global-sunrise-deal-might-still-fail)

On slide 7 of the earnings presentation it shows that they have 19 billion of cash and they claim that 742 million shares outstanding equals 20 dollars per share.  Now maybe i'm crazy and i have listened to lots of horse shit from these guys for almost 5 years now but those numbers dont add up.  What am i missing?

Nevermind I think they are just talking about the 15 billion and not the other 4 billion of assets within that box
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on March 03, 2019, 05:40:09 AM
The tax asset is debatable. I mean I saw this at other companies and it essentially reduces taxable income. In the end, this asset doesn't really exist, it just means you collect more cash each year than you would have otherwise. For sure I would discount this entirely from the calculation. I think they are trying to make it easy to calculate a valuation. 4.8 billion of OCF * 10x OCF = 48 billion + ~22/share of cash+investments = $64.69 + $22 = $86/share. Now I don't know if the 10x ocf would include or exclude debt per share of those businesses. When you place a multiple of OCF as a valuation sale price, usually that includes the whole package. Still take 86 and divide by 2 for a large margin of safety and you still get $43 versus $26 today, or 65% below. I'm a little skeptical of OCF valuations. I much prefer FCF valuations. What is the long term FCF ? They say 2019 will do 600 million. Let's say that is not quite yet the full low capex potential of the business but let's be generous and say 1 billion. Buffett seems to buy great businesses at maybe 13 to 15x and that's for him a bargain. So that would be 13 billion to 15 billion...$17 to $20 a share...plus the 22 in cash+investments is the $39-$42 range...If you think the current 2019 600m is the best it'll get that's $11/share + $22 is arounnd 33-34...so I'll say fair value is perhaps 33 to 43 conservatively measured. The stock should trade at least $5-$10 higher no matter what and I hope the sales will simplify and derisk it so the market starts to like it again.


add- https://www.gurufocus.com/news/827633/value-idea-contest-liberty-global-plc

His sum of the parts comes out to around 50...
Title: Re: LBTYA - Liberty Global
Post by: khturbo on March 06, 2019, 07:27:04 AM
If you put a 10x OCF multiple on remainco then of course it's cheap. They might be able to find a buyer for those assets at 10x but no chance that remainco assets are worth even close to that on their own.

Charter trades at 10x EBITDA but has was less capex / EBITDA, is growing faster, less competition, NOLs, etc. etc.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on March 06, 2019, 01:39:31 PM
The 10x ocf they got on the 3 big sales, swiss , germany, austria are for poor businesses, in regulated countries that don't like it if Americans make too big of a buck. Virgin is their crown jewel which is the main remaining asset.

What multiple should we place on it if not 10x?
I'm not sure if the logic that Charter is a good business in US market at 10x ocf implies that Virgin , a poorer business in UK is worth less. But if we value it at 5x OCF, then it has a value of zero. Why are they even holding it if their top business with the best chances of free cash flow is worth nothing?

Title: Re: LBTYA - Liberty Global
Post by: khturbo on March 07, 2019, 05:39:50 AM
I do agree that if they sell it they should be able to get 10x+ on a sale. The way I think about those other sales is that LBTYK received some of the fixed/mobile synergies but just as cash up front. So say those businesses were worth 7-8x but they got 10x as their participation.

On the comparison to CHTR, if you value it as (EV / (EBITDA - capex)) you can see why CHTR should trade at a MUCH higher EV / EBITDA multiple. CHTR also has much better growth prospects. Thinking about it as above, I think that's why some people think that in a few years CHTR could sell for maybe 12x+. It's probably worth 10x by itself and if they get some of the synergies on the sale then they could get a bit higher of a price.

Right, I wouldn't say it's worth 5x. If I map everything out to the fcf and discount it I roughly get a value of 7-8x. Depends on your discount rate and other assumptions of course and there's a lot of variability due to the leverage. But I get something like a 20% IRR on CHTR at 10x and the same IRR on LBTYK in that 7-8x range. Obviously depends on assumptions.

Looks to me like the market is valuing it a bit less than that assuming the deals get done, so I do own a bit. But I also do think if the results keep being poor then maybe it isn't even worth 7x. I hope that either lightning will work out or they'll end it because that has been a huge drag on cash generation. Ex that the UK assets do look better than 7x to me.
Title: Re: LBTYA - Liberty Global
Post by: ander on March 07, 2019, 06:35:36 AM
I do agree that if they sell it they should be able to get 10x+ on a sale. The way I think about those other sales is that LBTYK received some of the fixed/mobile synergies but just as cash up front. So say those businesses were worth 7-8x but they got 10x as their participation.

On the comparison to CHTR, if you value it as (EV / (EBITDA - capex)) you can see why CHTR should trade at a MUCH higher EV / EBITDA multiple. CHTR also has much better growth prospects. Thinking about it as above, I think that's why some people think that in a few years CHTR could sell for maybe 12x+. It's probably worth 10x by itself and if they get some of the synergies on the sale then they could get a bit higher of a price.

Right, I wouldn't say it's worth 5x. If I map everything out to the fcf and discount it I roughly get a value of 7-8x. Depends on your discount rate and other assumptions of course and there's a lot of variability due to the leverage. But I get something like a 20% IRR on CHTR at 10x and the same IRR on LBTYK in that 7-8x range. Obviously depends on assumptions.

Looks to me like the market is valuing it a bit less than that assuming the deals get done, so I do own a bit. But I also do think if the results keep being poor then maybe it isn't even worth 7x. I hope that either lightning will work out or they'll end it because that has been a huge drag on cash generation. Ex that the UK assets do look better than 7x to me.

So what stock price per share do you get to if LBTYK is worth based on your math of 7x? Thanks.
Title: Re: LBTYA - Liberty Global
Post by: khturbo on March 07, 2019, 09:29:04 AM
There are about a million ways to slice and dice it, but if I calculate everything on a proportionate owned basis (i.e. I take 100% of Virgin and CEE OCF and debt, 50% of Netherlands, and 59.7% of Belgium) I get ~$4.78bb in OCF and $31.09bb of net debt. After the proceeds of 10.6bb euros and 6.3bb swiss francs at 7x I get ~$28 / share.

Since there's so much leverage, a small change in the multiple gets you a big change in the valuation. 8x, which also seems reasonable to me, would get you to $34.

Others might not consolidate the Netherlands like I did or make some other adjustments so the numbers could be kind of different but those are hopefully roughly in the right ballpark.
Title: Re: LBTYA - Liberty Global
Post by: ander on March 20, 2019, 09:48:38 AM
Not sure if this is expected.

EU regulators to warn Vodafone, Liberty Global about $22 bln deal - sources

BRUSSELS, March 20 (Reuters) - EU antitrust regulators are set to warn Vodafone(VOD) and Liberty Global(LBTYA) about the possible anti-competitive effects of their $22 billion deal, two people familiar with the matter said on Wednesday.

The warning, via a statement of objections setting out the European Commission's concerns, is expected to be conveyed to the companies shortly, the people said.

The EU antitrust enforcer opened a full-scale investigation into the deal in December last year, saying that Vodafone's(VOD) purchase of Liberty Global's(LBTYA) assets in Germany and east Europe may hurt competition in Germany and the Czech Republic. (Reporting by Foo Yun Chee)
Title: Re: LBTYA - Liberty Global
Post by: dwy000 on March 20, 2019, 10:16:10 AM
Not sure if this is expected.

EU regulators to warn Vodafone, Liberty Global about $22 bln deal - sources

BRUSSELS, March 20 (Reuters) - EU antitrust regulators are set to warn Vodafone(VOD) and Liberty Global(LBTYA) about the possible anti-competitive effects of their $22 billion deal, two people familiar with the matter said on Wednesday.

The warning, via a statement of objections setting out the European Commission's concerns, is expected to be conveyed to the companies shortly, the people said.

The EU antitrust enforcer opened a full-scale investigation into the deal in December last year, saying that Vodafone's(VOD) purchase of Liberty Global's(LBTYA) assets in Germany and east Europe may hurt competition in Germany and the Czech Republic. (Reporting by Foo Yun Chee)

Hmm.  Not exactly sure what that means.  Are they warning that it won't get approved?  That there will need to be divestitures?  Or is this standard language that says "we'll approve it but we're keeping an eye on you".
Title: Re: LBTYA - Liberty Global
Post by: ander on March 21, 2019, 09:10:19 AM
The following was in an updated article: "Vodafone (VOD) is expected to offer concessions to address EU concerns about the deal."

So I guess that's why it's viewed as a non-event so far.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on March 25, 2019, 10:54:00 AM
https://www.broadbandtvnews.com/2019/03/25/german-industry-associations-oppose-vodafone-liberty-global-cable-deal/
Title: Re: LBTYA - Liberty Global
Post by: ander on March 25, 2019, 04:53:00 PM
I wonder what kind of concessions they could make to rectify the concerns raised by the unions in that article.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on March 26, 2019, 04:32:14 AM
I am not sure I understand the monopolize argument. Vodafone is a mobile company. If anything they would monopolize the cable-mobile market. But the mobile market is kinda large. If Liberty owned Unitymedia before was it not already monopolizing the market? And if Vodafone has operations in other countries, how does that impact Germany per say? I think one has to remember that everyone is talking their book/vested interest. I am SO glad Global has finally woken up to the very treacherous and anti-business environment in EU and decided to sell. I think even Latin American dictators are more reasonable than the EU )) However not all EU countries are the same. I think they make a mistake to sell CZ, but Romania, Belgium, Germany, Switzerland I agree. Poland is probably an interesting exception too. Seems Global is having it's own Cable-exit moment. It was easier to enter, but harder to exit.
Title: Re: LBTYA - Liberty Global
Post by: ander on March 26, 2019, 08:20:40 AM
I am not sure I understand the monopolize argument. Vodafone is a mobile company. If anything they would monopolize the cable-mobile market. But the mobile market is kinda large. If Liberty owned Unitymedia before was it not already monopolizing the market? And if Vodafone has operations in other countries, how does that impact Germany per say? I think one has to remember that everyone is talking their book/vested interest. I am SO glad Global has finally woken up to the very treacherous and anti-business environment in EU and decided to sell. I think even Latin American dictators are more reasonable than the EU )) However not all EU countries are the same. I think they make a mistake to sell CZ, but Romania, Belgium, Germany, Switzerland I agree. Poland is probably an interesting exception too. Seems Global is having it's own Cable-exit moment. It was easier to enter, but harder to exit.


That's how I'm thinking about it as well that the mobile-cable market should be looked at together, but it will be interesting to see if the regulator is that objective, forward-thinking, and rational.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on March 27, 2019, 05:52:31 PM
I am not sure I understand the monopolize argument. Vodafone is a mobile company. If anything they would monopolize the cable-mobile market. But the mobile market is kinda large. If Liberty owned Unitymedia before was it not already monopolizing the market? And if Vodafone has operations in other countries, how does that impact Germany per say? I think one has to remember that everyone is talking their book/vested interest. I am SO glad Global has finally woken up to the very treacherous and anti-business environment in EU and decided to sell. I think even Latin American dictators are more reasonable than the EU )) However not all EU countries are the same. I think they make a mistake to sell CZ, but Romania, Belgium, Germany, Switzerland I agree. Poland is probably an interesting exception too. Seems Global is having it's own Cable-exit moment. It was easier to enter, but harder to exit.

5 Stages of a value investment in a European value stock:

1) We purchased a company in growth industry in XYZ land at a huge discount to intrinsic value and at half the multiple of a similar US company? This is the most obvious mispriced stock opportunity we have seen for a long time.

Several month later:
2) While results have somewhat disappointed, the discount to intrinsic value is even greater than at the time of our first purchase.We have visited management and discussed with them a path how the valuation gap can be closed.

3) The deterioration of the regulatory environment in XYZ land was not foreseeable and has further depressed the value of our investment in the short run, however the  long term outlook is unchanged  and the valuation is still compelling.

4) The business of our investment has come under pressure, but the company continues to outperform its competitors. The company has a strong balance sheet and plenty of liquidity to survive the current downturn.

5) We are appalled by to the very treacherous and anti-business environment in EU and decided to sell. We think even Latin American dictators are more reasonable than the EU.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on March 28, 2019, 01:43:52 AM
 ;D

Indeed! I remember Rick Rule who I really like to listen to when someone asked him about the safety of investing in a mine in BC Canada versus in Africa. His answer was killer. Paraphrasing but apparently the BC mine was expropriated in various sneaky ways in the 70s and 80s while the African mine ran smoothly and went on to earn a great return.
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on March 28, 2019, 04:05:29 AM
FWIW, I believe the sale will be approved with some caveats. What you are seeing is that a deal like this is more complex and all the stakeholders (employees, regulators, customers etc.) have an input and will be heard. You can call it socialism (which it isn’t) but it’s just how the sausage is made.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on March 28, 2019, 05:30:06 AM
It depends on what remedies and if Vodafone accepts. Perhaps Global also has a say in it, perhaps it can separate the sales package. In other countries remedies have been no price increases for a fixed period of time. Or divesting another division. Or not combining x & y. I agree there is much room for negotiation. if the commission is worried that Vodafone's mobile business will provide synergies with the cable - a big reason Vodafone wanted to buy and Global sell, then if the EU suggests dis-synergies, it might not go down too well. If it is time limited, that may be easier to swallow. If it is permanent, then Vodafone may get cold feet.
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on March 29, 2019, 04:41:03 AM
It seems that Vodafone does have cable ops in Germany , https://www.broadbandtvnews.com/2019/03/25/vodafone-completes-analogue-switch-off-on-german-cable/
Title: Re: LBTYA - Liberty Global
Post by: ander on April 02, 2019, 07:50:24 AM
LONDON/BRUSSELS, April 2 (Reuters) - Vodafone(VOD) still expects to secure EU antitrust approval for its $22 billion purchase of Liberty Global's(LBTYA) assets in Germany and eastern Europe by the middle of the year, it said on Tuesday.

The world's second-largest mobile operator expressed its confidence after receiving the European Commission's statement of objections, which set out the watchdog's concerns about the deal.

Reuters reported on March 20 that the EU competition enforcer would warn the company about possible anti-competitive effects from the proposed deal. The Commission had previously voiced worries about the impact in Germany, the Czech Republic, Hungary and Romania.

"The Commission's statement of objections is an expected part of the review process. We will review the statement and continue our constructive dialogue with the Commission," Vodafone(VOD) said in a statement.

"We still expect to receive final approval in the middle of this year." (Reporting by Paul Sandle in London and Foo Yun Chee in Brussels Editing by David Goodman)

Title: Re: LBTYA - Liberty Global
Post by: ander on May 21, 2019, 07:41:06 AM
I have followed the company for a few years and have been a shareholder since last year. I spent the past couple of weeks re-doing my research on the company. I continue to like it and believe there is substantial upside, but I'd like to get feedback or be challenged or debate certain topics related to the company. It is of course not the most straightforward given the number of markets they are involved in - and maybe that's partially why the opportunity exists.

CapEx: the company uses OFCF which takes out the full amount of capex, but there are some puts and takes. IR has said maybe maintenance capex is 20-40%. They also look at % of revenue for capex spent. What do you assume is maintenance capex? What is the respective growth if you are excluding growth capex? What do you define as growth capex - passing new homes, upgrading the infrastructure (is upgrading growth capex or just maintenance)? Do you adjust your growth numbers downward? I am trying to get to a run-rate FCF number. They tout EV / OCF since that is what the market has done.

Project Lightning: Q4 '18 call they gave us a breakout of Project Lightning versus Rest of Business which is how they look at it internally and we can calculate what the Rate of Return on Capital for Lightning should be which is substantially above cost of capital. That's great and when fully up and running that could be additional $500 million or $600 million of OCF. But that would be incremental OCF of 25% or so to Virgin Media. What rate of return on capital are you calculating for Lightning?

Questions for thought (I don't expect any concrete answers): What do you think the end-game is here for Malone / Fries to realize the value (private market seems to value the assets substantially higher - likely because of synergies as well)? To exit Europe completely eventually with a sale - he hates paying taxes, so maybe some kind of tax efficient merger with Sky (Comcast) if that's allowed? Will he first finish Project Lightning? Maybe buy a UK MVNO?
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on May 21, 2019, 11:40:37 AM
I hope whatever they do, it will not be in the cable business unless it's in a strong relatively unregulated jurisdiction. Hard to find anywhere. An intelligent investor is one that can reallocate capital in new areas , not always what it did before.
Title: Re: LBTYA - Liberty Global
Post by: ander on May 21, 2019, 01:41:33 PM
I hope whatever they do, it will not be in the cable business unless it's in a strong relatively unregulated jurisdiction. Hard to find anywhere. An intelligent investor is one that can reallocate capital in new areas , not always what it did before.

I would assign low odds to anything that's substantial in size outside of the cable business or related areas.
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on May 21, 2019, 02:59:14 PM
The original plan for Global was to capitalize on the growing integration of European countries which was back then thought as ineluctable.
Step 1 : They would buy cable systems here and there and get to compete with inefficient former state monopolies with an inferior product (copper), overweight complacent bureaucratic managements and paying a high dividend (because the country is often still a major shareholder and demands it).
Step 2 : Eventually unify them all together and crush competition through their sheer scale, quickly acquiring the dozens of sub-scale regional systems left around, once something like the United States of Europe would form.
They basically tried to replicate the US cable system history.

What actually happened
- It proved harder than expected to succeed operationally because management from incubants acted irrationally and started a race to the bottom. Mike Fries also couldn't handle it all at the same time / didn't hire the right managers and several businesses turned into a operational nightmare (Romania, Netherlands, Switzerland).
- M&A and fair competition have often been blocked by the country/the EU commission (Germany, Poland).
- Some countries even forced cable to wholesale its bandwidth (Belgium).
- Thankfully their M&A excellence (buy low, sell high, take advantage of public/private markets differences) and a couple of successful "flips" (Germany) have allowed them to achieve pretty satisfying returns overall despise all of those headwinds.

And at a macro level
Europeans didn't pursue more integration. Instead, a bad economic downturn and fear of uncontrolled immigration is leading them to vote more and more for populist nationalist parties.
Malone and co are of course Fox "News" people. So just listen to the description of Europe that's being spread on there for 5 minutes : one big communist war zone invaded by Muslim terrorists.
So of course they're backtracking like crazy.
(Not saying they're necessarily wrong to do so, I do think there's more pain ahead and the disintegration is likely to happen and to hurt)

Virgin in the UK
Their only fully owned business.
Around 60% of the value post-transaction

Not part of the Euro currency. Plus getting out first is probably the best move if you believe the collapse of the Union is inevitable.
They keep investing in new builds although the pace is sluggish, this makes me believe they're here to stay.

Plus Malone has developed a fondness for Ireland in his old age. He's of Irish descent and he's been buying several palaces and golf courses there. Knowing the guy, I wouldn't be surprised if there was not a tax implication there too. He could become Irish, renounce US citizenship and dodge the estate tax for his family when he dies. He highly regards Murdoch and he's praised the way he simplified his business by selling to Disney before passing it on to his children in one last buyout at a very high price plus taking stocks to avoid taxation.

I am pretty bullish on Virgin. They have much higher speeds and offer them at a slightly lower price than their only at-scale competition, BT. Plus the new German guy running it is super annoying (he reminds me of T-Mobile's CEO) but he seems good at what he does (Germany has been LBTYA's single best return on investment).

Telenet in Belgium
Literally the capital of the European Union (well, Bruxelles).
Around 20% of the value post-transaction.

They recently forced them to wholesale bandwidth.
Malone's reaction: revenues trends slightly down and cash flows are extremely high: they're not investing another euro in the business, just milking it to a slow death.

They only own 60% and the rest of Telenet is trading publicly at a very low EV/EBITDA valuation. The fact that they don't buy out the rest is telling. I think they're stuck here. Usually they'd try to do a private deal but i'd be hard to convince a buyer to pay >10XEbitda given the low trading valuation of the 40% they don't own. I don't know how they're going to do it but I'm sure they want out of there.

Vodafone-Ziggo in the Netherlands
Kind of a blackbox.
Rich country with low debt that should do OK in the event of a Union collapse or a new 2012-like debt crisis, so less rush to get out.
Around 20% of the value post-transaction.

The Netherlands business started as one of the operational nightmares described above but they seem to have stopped the hemorrhage with the merger. I think one company eventually buys out the other one's 50% but it's going to be complicated because Vodafone is already taking on a huge amount of debt to buy out Germany++ and they might not even be able to pay up for one more. My guess is Liberty plays a game of "I can wait forever" while Vodafone struggles with their balance sheet until they finally get desperate enough to sell their half to Liberty at a low price.

What will they do with the money?
My guess is nothing. Just pay down debt and buy back shares. This is Malone doing a beautiful deleveraging/descaling of a failed business attempt (unify European cable).
Title: Re: LBTYA - Liberty Global
Post by: Spekulatius on May 21, 2019, 04:36:31 PM
^ Pretty good  summary from Waywardcloud. Once you look around it is clear that the telecom industry economics in the US a better than almost anywhere else in the world. That’s why Malone can’t duplicate anywhere else what he has done in the US. Just look at LILA, which is worse than LBTYA.
Title: Re: LBTYA - Liberty Global
Post by: ander on May 21, 2019, 06:33:22 PM
WayWordCloud - thx for the response.

--Do you think that LBTYA might buy O2 UK from Telefonica? (I believe you mentioned that last year).
--Any thoughts on capex detail or FCF?

It will be interesting to see where the stock is in the coming quarters post-close of transaction and they resume share buybacks.
Title: Re: LBTYA - Liberty Global
Post by: ander on May 24, 2019, 06:24:14 AM
BRUSSELS, May 24 (Reuters) - EU antitrust regulators have extended by two weeks to July 23 their investigation into Vodafone's(VOD)$22 billion bid for Liberty Global's(LBTYA) cable networks in Germany and central Europe, according to a filing on the European Commission website.

The EU competition enforcer decline to comment on the reason for the extension. Vodafone(VOD), the world's second-largest mobile operator said discussions with the Commission were ongoing.

Earlier this month, Vodafone(VOD) offered to grant rival Telefonica Deutschland access to its enlarged high-speed broadband network to allay competition concerns about the deal..

However, rivals and customers have provided negative feedback to the Commission, suggesting Vodafone(VOD) may need to improve its proposal in order to win regulatory approval for the deal, sources said. (Reporting by Foo Yun Chee, editing by Louise Heavens)
Title: Re: LBTYA - Liberty Global
Post by: scorpioncapital on May 24, 2019, 07:38:29 AM
Is the issue that Vodafone has a business that would add more power with liberty's business? I mean if coca cola bought the asset would there be any issues ? (Not that they would )
Title: Re: LBTYA - Liberty Global
Post by: ander on May 25, 2019, 12:11:54 PM
Any thoughts on whether this is more positive or negative? On one hand, easier and cheaper for lbtya to expand. On the other hand, it’s cheaper and easier for competitors to expand than it was previously - so more competition for lbtya. Also all of the connections that lbtya has laid down directly are worth less now because could have piggybacked off of Openreach (British Telecom).

More people getting better broadband thanks to Ofcom rules
24 May 2019
Ultrafast broadband can be five times more reliable than older, standard broadband, and fast enough to allow lots of people in the same home to stream films in ultra-high definition at the same time, or make seamless video calls.

Thousands of homes and businesses now have access to this technology thanks to Ofcom rules designed to make it easier and more affordable to roll out better broadband networks.

Last year we set new rules to support investment in fibre networks. Under these rules, Openreach, which maintains the UK’s main broadband network, must let rival companies use its telegraph poles and underground ducts to lay their own fibre cables to residential customers. This access can cut the upfront cost of building full-fibre networks by around half.

Several firms – including Virgin Media, TalkTalk and CityFibre – are using these rules to connect thousands of homes and businesses to faster, more reliable broadband.

For example, Virgin Media rolled out full fibre in Pontyclun, Wales, by using Openreach’s ducts. This follows a trial last year in Lincolnshire, where Virgin Media used an Openreach duct to cut the amount of time and money it took lay its cables.

Meanwhile, TalkTalk has been trialling the use of ducts and poles as it seeks to roll out full fibre to three million premises by 2025. Between them, competing providers are using around 12,000 Openreach telegraph poles and 2,500 km of underground duct.

More people across the UK are set to benefit from Ofcom’s rules. Broadband provider toob recently secured funding for a full-fibre rollout programme, and expects to use Openreach’s infrastructure to achieve this.

Hyperoptic also has plans to use them as it rolls out over 5,000 km of fibre in order to reach five million premises by 2025, while providers Glide and NextGen Access have used them as part of their full-fibre rollout.

Ofcom has been looking at ways we could further improve access to Openreach’s infrastructure, to help strengthen the business case for companies laying new fibre cables. Today, we have announced a package of measures that would give these companies greater flexibility when building their networks.

In future, our measures would mean that they will be able to use Openreach’s ducts and poles for a wider variety of business cases, increasing the scope for them to invest in cutting-edge, ultrafast broadband.

Alan Bristow, Build Director for South of England and South Wales at Virgin Media, said: “We will consider using their ducts again so that more areas of the UK get a much-deserved broadband boost from Virgin Media.”

Jonathan Oxley, Ofcom’s Competition Group Director, said: “The amount of internet data used by people in the UK is expanding by around half every year. So, we’ll need faster, more reliable connections to our homes and offices.

“Our measures are designed to support the UK’s digital future by providing investment certainty for continued competitive investment in fibre and 5G networks across the country.”

Title: Re: LBTYA - Liberty Global
Post by: Munger_Disciple on May 25, 2019, 04:22:49 PM
I  don't understand Virgin Media's advantage in UK over competition if anyone has access to the conduit where they can put their own fiber. If the Vodaphone deal goes through, Liberty Global will mainly be a UK based cable company.
Title: Re: LBTYA - Liberty Global
Post by: WayWardCloud on May 27, 2019, 01:44:54 PM
WayWordCloud - thx for the response.

--Do you think that LBTYA might buy O2 UK from Telefonica? (I believe you mentioned that last year).
--Any thoughts on capex detail or FCF?

It will be interesting to see where the stock is in the coming quarters post-close of transaction and they resume share buybacks.

Obviously pure speculation, but since you ask...
I expect Virgin to finally follow the "new cable playbook", a.k.a. Charter's method.

Rutledge essentially took Malone's old cable playbook and added the twist of actually caring about the consumer's happiness because investing in it leads to better growth, not so much through extra new adds but through reducing churn. It turns out this method over the long run actually pays better than milking every cent out of the trapped consumers while doing the least amount of effort possible (which is why cable providers used to be so hated by Americans).

Mike Fries is super competitive. I recall him mentioning Charter out of the blue during a couple calls and saying they're doing just as good even though nobody asked. Remember all those people seat at common board meetings and Malone is playing King Solomon in the middle deciding which one of the brothers are good boys. For example, he publicly congratulated Maffei on structuring the Formula One deal "in such a smart way" who won against Fries who was competing to buy it. So the pressure is there.

Up until a year or two ago, during every call, Fries would ONLY talk numbers, maybe because he had so many different businesses under LBTYA. He seemed completely disconnected from the ground operations, which is probably what led to failures such as Switzerland: it took them to be losing market share insanely fast to finally come up with a big plan to : bring 1Gig, bring an actually unlimited MVNO service, bring 4k boxes, add expensive exclusive sports content. Anyone could have told you those things were needed years ago. They took their customers for granted and fell asleep at the wheel. The limits of the old cable method showed so strongly with Switzerland because obviously their customers are rich so price is less of a differentiating factor, they need to be delighted, not given something good enough, but I believe the same can happen anywhere in Europe because there is usually much more overbuild (aka a choice between providers) than in the US.

For a while now, around when LILA got spinned I think, I've noticed him sounding more and more like other cable CEOs and emphasizing the customer. What new box they where getting, how good the WIFI signal was, could they easily access Netflix, Amazon Prime, etc. They chose Balan Nair to lead LILA, the Chief Technology Officer, not the COO, not a CEO of one of the countries, someone whose job was literally the customer's experience (the terminal box). They now just kicked the head of Virgin out and replaced him with Lutz Schuller from Germany who sounds like he's on Rutledge's "new playbook" 100%. Virgin has a better network than BT they should be crushing them and so far they are not which is such a waste. It's like if Charter was keeping its speeds low and its customer service terrible in houses where they compete with ATT instead of utilizing their superior product to offer things that copper just can't replicate. Stupid. Remember maybe 6 months ago when Virgin recognized a small additional loss and they explained it was due to them not charging anymore some customers an extra $2 per month for using a debit/credit card to pay online?! That was insane and a real eye opener to me. Fries had been following the "old" cable playbook and treating his clients like shit squeezing maximum EBITDA each quarter instead of thinking long term.

So long story short: I expect Virgin to start treating its customers well and push the speeds to 1Gig with great set top boxes while keeping their MVNO the way it is. As long as it's top notch for the customer (it seems like there's no restrictions) they are in no hurry to buy O2 or anybody else (just like Charter with Verizon). Even though Fries has guided for decreased capex and increased FCF at Virgin I actually see them as only in the 4th or 5th inning of their network upgrade and on top of it doing new builds through Lightning so I don't know how a substantial decline in intensity could happen for the next 3 or so years. Which is fine. Look at the chart price for Charter during their integration phase.


Title: Re: LBTYA - Liberty Global
Post by: vince on May 27, 2019, 02:17:11 PM
WayWordCloud - thx for the response.

--Do you think that LBTYA might buy O2 UK from Telefonica? (I believe you mentioned that last year).
--Any thoughts on capex detail or FCF?

It will be interesting to see where the stock is in the coming quarters post-close of transaction and they resume share buybacks.

Obviously pure speculation, but since you ask...
I expect Virgin to finally follow the "new cable playbook", a.k.a. Charter's method.

Rutledge essentially took Malone's old cable playbook and added the twist of actually caring about the consumer's happiness because investing in it leads to better growth, not so much through extra new adds but through reducing churn. It turns out this method over the long run actually pays better than milking every cent out of the trapped consumers while doing the least amount of effort possible (which is why cable providers used to be so hated by Americans).

Mike Fries is super competitive. I recall him mentioning Charter out of the blue during a couple calls and saying they're doing just as good even though nobody asked. Remember all those people seat at common board meetings and Malone is playing King Solomon in the middle deciding which one of the brothers are good boys. For example, he publicly congratulated Maffei on structuring the Formula One deal "in such a smart way" he won against Fries who was competing to buy it. So the pressure is there.

Up until a year or two ago, during every call, Fries would ONLY talk numbers, maybe because he had so many different businesses under LBTYA. He seemed completely disconnected from the ground operations, which is probably what led to failures such as Switzerland: it took them to be losing market share insanely fast to finally come up with a big plan to : bring 1Gig, bring an actually unlimited MVNO service, bring 4k boxes, add expensive exclusive sports content. Anyone could have told you those things were needed years ago. They took their customers for granted and fell asleep at the wheel. The limits of the old cable method showed so strongly with Switzerland because obviously their customers are rich so price is less of a differentiating factor, they need to be delighted, not given something good enough, but I believe the same can happen anywhere in Europe because there is usually much more overbuild (aka a choice between providers) than in the US.

For a while now, around when LILA got spinned I think, I've noticed him sounding more and more like other cable CEOs and emphasizing the customer. What new box they where getting, how good the WIFI signal was, could they easily access Netflix, Amazon Prime, etc. They chose Balan Nair to lead LILA, the Chief Technology Officer, not the COO, not a CEO of one of the countries, someone whose job was literally the customer's experience (the terminal box). They now just kicked the head of Virgin out and replaced him with Lutz Schuller from Germany who sounds like he's on Rutledge's "new playbook" 100%. Virgin has a better network than BT they should be crushing them and so far they are not which is such a waste. It's like if Charter was keeping its speeds low and its customer service terrible in houses where they compete with ATT instead of utilizing their superior product to offer things that copper just can't replicate. Stupid. Remember maybe 6 months ago when Virgin recognized a small additional loss and they explained it was due to them not charging anymore some customers an extra $2 per month for using a debit/credit card to pay online?! That was insane and a real eye opener to me. Fries had been following the "old" cable playbook and treating his clients like shit squeezing maximum EBITDA each quarter instead of thinking long term.

So long story short: I expect Virgin to start treating its customers well and push the speeds to 1Gig with great set top boxes while keeping their MVNO the way it is. As long as it's top notch for the customer (it seems like there's no restrictions) they are in no hurry to buy O2 or anybody else (just like Charter with Verizon). Even though Fries has guided for decreased capex and increased FCF at Virgin I actually see them as only in the 4th or 5th inning of their network upgrade and on top of it doing new builds through Lightning so I don't know how a substantial decline in intensity could happen for the next 3 or so years. Which is fine. Look at the chart price for Charter during their integration phase.

Great post....Fries absolutely screwed it up.  Just look at how far behind they are in their commercial business relative to their American peers, it's embarrassing!!!
Title: Re: LBTYA - Liberty Global
Post by: rogermunibond on June 05, 2019, 08:31:48 AM
https://www.sec.gov/Archives/edgar/data/912958/000114420419029487/tv520778-f1.htm

Millicom files for offering as the Swedish investment group Kinnevik exits
Title: Re: LBTYA - Liberty Global
Post by: Foreign Tuffett on June 05, 2019, 06:36:25 PM
https://www.sec.gov/Archives/edgar/data/912958/000114420419029487/tv520778-f1.htm

Millicom files for offering as the Swedish investment group Kinnevik exits

That's much more relevant to Liberty Latin America than it is to Liberty Global.
Title: Re: LBTYA - Liberty Global
Post by: Value92 on June 11, 2019, 10:03:58 PM
No question this assets is worth much more than what it is selling for in today’s market.

My issue with Malone is that he might be screwing minority shareholders. I still haven’t finished looking at possible questionable transactions. So far I have the the 1st Liberty Media Split, the UGC transaction in 2005 and the C&W deal. Are there other deals I should look at?

To be honest Malone reminds me much more of Henry Singelton than WEB does. He is extremely rational and will take advantage of any market opportunity there is. Does anybody know if WEB ever invested with Singelton? This might help determine if Malone entities are investable for me (if you can trust him, I don’t want him as my partner).
Title: Re: LBTYA - Liberty Global
Post by: John Hjorth on June 12, 2019, 01:28:39 AM
Value92,

Recently Nicke posted this (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/charlie-munger-on-henry-singleton-(2013-sh-meeting)/).