Author Topic: LILA - Liberty Global Latin America tracker  (Read 122627 times)

maybe4less

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Re: LILA - Liberty Global Latin America tracker
« Reply #380 on: October 09, 2019, 11:07:35 AM »
While my initial impression of this deal was negative, I have changed my mind:

Late September 2018 - Hurricane Maria hits Puerto Rico, causing massive damage

10/2018 - LILA acquires 40% minority stake in Liberty Puerto Rico for 9.5 million LILAK shares. This gives it full ownership of Liberty Puerto Rico

7/2019 - Reuters reports that AT&T, which is looking to reduce its massive debt load, has put its Puerto Rico operations up for sale for ~$3 billion. 

https://www.reuters.com/article/us-at-t-divestiture-puertorico-idUSKCN1UD30O

Today - LILA is acquiring AT&T's Puerto Rico operations for $1.95 billion. Once the transaction closes LILA will be #1 in mobile and #1 in cable/fixed on the island. 


I think LILA is being opportunistic in assembling a dominant position in Puerto Rico at attractive prices

Absolutely, LILA is going to have the only quad-play on the island and is going to dominate the market. AT&T was basically a price insensitive seller and LILA was apparently the only buyer. The other mobile networks were unlikely to get through anti-trust review and it looks like speculation that PE or infrastructure buyers would show up was incorrect.


rogermunibond

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Re: LILA - Liberty Global Latin America tracker
« Reply #381 on: October 09, 2019, 11:28:25 AM »
Quad play doesn't mean much to consumers anymore.

It's back to a double play (high-speed broadband and wireless).  With those two converging as well.

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #382 on: October 09, 2019, 12:06:20 PM »
After the AT&T deal is completed, the logical next step is a LILA + Millicom combination.

dwy000

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Re: LILA - Liberty Global Latin America tracker
« Reply #383 on: October 09, 2019, 01:06:36 PM »
After the AT&T deal is completed, the logical next step is a LILA + Millicom combination.

Without additional equity this might take TIGO off the table for next couple of years.  Paying in LILAC stock at $17 doesnt hold much appeal and they are tapped out in leverage until they bring it down from this acquisition.

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #384 on: October 09, 2019, 02:54:52 PM »

Without additional equity this might take TIGO off the table for next couple of years.  Paying in LILAC stock at $17 doesnt hold much appeal and they are tapped out in leverage until they bring it down from this acquisition.

I agree but Malone can always conjure something up out of thin air, like he did with Charter stake by attracting private investors. Also there is a possibility that Liberty Global (with a lot of dry powder) could play a role.
« Last Edit: October 09, 2019, 03:14:29 PM by Munger_Disciple »

HalfMeasure

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Re: LILA - Liberty Global Latin America tracker
« Reply #385 on: October 10, 2019, 05:44:47 AM »

Without additional equity this might take TIGO off the table for next couple of years.  Paying in LILAC stock at $17 doesnt hold much appeal and they are tapped out in leverage until they bring it down from this acquisition.

I agree but Malone can always conjure something up out of thin air, like he did with Charter stake by attracting private investors. Also there is a possibility that Liberty Global (with a lot of dry powder) could play a role.

I think this deal will take less cash than people realize. $1.95bln is the EV they're paying at ~6.5x EBITDA => EBITDA ~$300mln => at 4.5x leverage there is $1.35bln in debt capacity on the asset => the equity cheque they need to write is ~$600mln. At 4.1x net leverage last Q and $1.525bln in EBITDA expected for the year, $600mln in incremental debt takes LILA to almost exactly 4.5x net leverage. Add in that they've likely generated some cash in Q3, and will continue to generate cash into the close of this deal. This is the beauty of the model if they're buying assets at ~6x and levering to ~4-4.5x. If a really attractively priced deal came along, I think they would be willing to push above 4.5x net as well.

Spekulatius

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Re: LILA - Liberty Global Latin America tracker
« Reply #386 on: October 10, 2019, 05:49:25 AM »

Without additional equity this might take TIGO off the table for next couple of years.  Paying in LILAC stock at $17 doesnt hold much appeal and they are tapped out in leverage until they bring it down from this acquisition.

I agree but Malone can always conjure something up out of thin air, like he did with Charter stake by attracting private investors. Also there is a possibility that Liberty Global (with a lot of dry powder) could play a role.

I think this is a great deal for LILA, especially with some synergies in Puerto Rico that they should be able to realize. I would be careful about Malone swooping in as this could very well result in more shareholder fleecing.
To be a realist, one has to believe in miracles.

HalfMeasure

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Re: LILA - Liberty Global Latin America tracker
« Reply #387 on: October 10, 2019, 06:04:10 AM »
I think this is a great deal for LILA, especially with some synergies in Puerto Rico that they should be able to realize. I would be careful about Malone swooping in as this could very well result in more shareholder fleecing.

The synergies in PR are very compelling, but I wonder how much we will get a sense for. Cross-selling between wireless/broadband customers and churn reduction might be harder to quantify in the short-term vs. just vanilla cost synergies.

maybe4less

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Re: LILA - Liberty Global Latin America tracker
« Reply #388 on: October 10, 2019, 09:02:54 AM »
Quad play doesn't mean much to consumers anymore.

It's back to a double play (high-speed broadband and wireless).  With those two converging as well.

Sure, whether someone wants a quad, a triple, or a double, the point is still the same: no other competitor has a high speed fixed connection and a mobile offering.

maybe4less

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Re: LILA - Liberty Global Latin America tracker
« Reply #389 on: October 10, 2019, 09:07:50 AM »
I think this is a great deal for LILA, especially with some synergies in Puerto Rico that they should be able to realize. I would be careful about Malone swooping in as this could very well result in more shareholder fleecing.

The synergies in PR are very compelling, but I wonder how much we will get a sense for. Cross-selling between wireless/broadband customers and churn reduction might be harder to quantify in the short-term vs. just vanilla cost synergies.

I suspect they will give us some guidance soon, probably on the earnings call. In addition to cross-selling/churn reduction, IR pointed out cost synergy buckets of "(i) Network synergies migrating from AT&T systems and support, (ii) SG&A consolidation of the two businesses, [and] (iii) Subsea moving to our network over time."