Author Topic: LILA - Liberty Global Latin America tracker  (Read 98794 times)

muscleman

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Re: LILA - Liberty Global Latin America tracker
« Reply #170 on: September 04, 2016, 08:57:13 AM »
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

Even for video, satellite's advantage was bigger before cable started going all digital.

How does digital video close the satellite's advantage? Can you please elaborate?

For a while, satellite was all digital and carried tons of channels while cable was a mix of analog and digital channels, with the analog channels eating up a ton of bandwidth and restricting the total number of channels that could be carried. So it was a lower-quality offering that that couldn't carry as many channels.

Now that cable is going all digital, it can carry more channels that are all HD, and the removal of analog channels frees up a lot of space to take up broadband speeds up, which makes the overall offering more compelling.


Thank you!


ni-co

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Re: LILA - Liberty Global Latin America tracker
« Reply #171 on: September 04, 2016, 11:11:53 PM »
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

My point was not to make an ad hominem argument but to make you think about why he did it. If you follow the Liberty threads in this forum you know that it's about broadband and not video. It's all about data capacity. Capacity for internet over satellite is so limited that I'd argue that we aren't even talking about the same business/industry. So, of all of the arguments you could make why not to invest into LILA "satellites" is not a good one.
« Last Edit: September 04, 2016, 11:15:01 PM by ni-co »

ratiman

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Re: LILA - Liberty Global Latin America tracker
« Reply #172 on: September 05, 2016, 05:25:16 AM »
Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

My point was not to make an ad hominem argument but to make you think about why he did it. If you follow the Liberty threads in this forum you know that it's about broadband and not video. It's all about data capacity. Capacity for internet over satellite is so limited that I'd argue that we aren't even talking about the same business/industry. So, of all of the arguments you could make why not to invest into LILA "satellites" is not a good one.

OK thanks for clarifying. Nobody thinks data over satellites is an option. The competitive options, I'm guessing, are broadband vs. satellite+mobile. In PR it's Liberty PR vs. Movil/Dish, so broadband is really competing with a better mobile plan, right? In the US a consumer might choose all three but is that the case in LA?  The very interesting slide deck makes some points about low uptake of broadband among lower income groups in US and LA, and most consumers in LA are low income by our standards. Sure, cable broadband is the superior product, but is there demand for it versus mobile from your typical low income consumer? I don't know but I suspect the real investment case for LILA is not "the Puerto Rican cable market is very exciting" but instead confidence in Malone to work his magic. And yes, that is an ad hominem.
« Last Edit: September 05, 2016, 05:43:28 AM by ratiman »

muscleman

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Re: LILA - Liberty Global Latin America tracker
« Reply #173 on: November 04, 2016, 07:29:11 AM »
Q3 out. Stock dropped sharply.
https://www.sec.gov/Archives/edgar/data/1570585/000157058516000862/exhibit991lgearningsreleas.htm

CWC's OCF number is disappointing. The promotional Mike Fries kept dodging the numbers.

""LiLAC, our Latin American and Caribbean tracking stock, reported 5% rebased OCF growth in Q3. CWC's7 Q3 financial results were below our expectations, but we have already started laying the groundwork for improved future performance. We now expect LiLAC Group, excluding Cable & Wireless, to achieve 6% rebased OCF growth for full year 2016. With respect to CWC, we expect that the business will deliver OCF between $215 and $225 million8 in Q4 2016"

Where is the Q3 number?????

I finally found it buried down pages below.

"Finally, our recently acquired CWC business, reported a 4% rebased revenue contraction during Q3 2016"  :(



« Last Edit: November 04, 2016, 07:47:40 AM by muscleman »

Shooter MacGavin

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Re: LILA - Liberty Global Latin America tracker
« Reply #174 on: November 04, 2016, 10:13:57 AM »
a bit of an extreme reaction no?   although down 4% on an apples to apples for rev is pretty shocking.

« Last Edit: November 04, 2016, 10:18:17 AM by Shooter MacGavin »

brendanb22

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Re: LILA - Liberty Global Latin America tracker
« Reply #175 on: November 04, 2016, 10:31:04 AM »
Seems like a bit of an overreaction. Do you think they will rebound from this or is it more of a structural problem?

namo

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Re: LILA - Liberty Global Latin America tracker
« Reply #176 on: November 04, 2016, 12:29:22 PM »
Yet according to them the corresponding OCF is up 3% as they cut costs. Yes, I was surprised by the reaction.

On the other hand, if you look at the raw numbers, the number of shares has been multiplied by 4 and the Y/Y OCF growth is +177%, so there's a big gap. It's probably a bad quarter, and the figures are before synergies, but that may explain some of the reaction?

I need to dig deeper into the numbers.
« Last Edit: November 04, 2016, 12:42:05 PM by namo »

muscleman

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Re: LILA - Liberty Global Latin America tracker
« Reply #177 on: November 04, 2016, 12:46:39 PM »
Yet according to them the corresponding OCF is up 3% as they cut costs. Yes, I was surprised by the reaction.

On the other hand, if you look at the raw numbers, the number of shares has been multiplied by 4 and the Y/Y OCF growth is +177%, so there's a big gap. It's probably a bad quarter, and the figures are before synergies, but that may explain some of the reaction?

I need to dig deeper into the numbers.

The OCF growth comes entirely from synergies, which you can't rely on forever. The cost cutting can only go that far. You can't cut your cost below zero.
In addition, the original investment thesis already included the synergies, so we need to look at the OCF growth without synergies.


Shooter MacGavin

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Re: LILA - Liberty Global Latin America tracker
« Reply #178 on: November 04, 2016, 12:57:29 PM »
@namo, I'm not sure what you mean by OCF is up 3% as they cut costs and OCF growth is 177% Y/Y?

The sharecount went up because of the C&W acquisition since Liberty Global issued stock.  Of course OCF for Lilak is up 177% because of C&W.

On C&W alone, the revenue is down 4%.  It seems like they bought less than what they bargained for.   I say that because in July, C&W posted FY results for C&W saying that proportionate EBITDA was up 14% Y/Y.  And now all of a sudden, now that the deal is closed, on a re-based basis, they're going to be flat Y/Y for C&W.  So the old C&W team may have been far more optimistic before selling C&W to Liberty Global.

That being said, hopefully its a fixable problem.  Mike said something about management being distracted with the acquisition, delayed product launches and a more competitive environment, and that they're optimistic about synergies, which would add back roughly 10% to OCF/EBITDA over the next 4 years.

I wish Fries would stop being so optimistic and promotional and talk a little bit about what the challenges are in this business.  Rutledge is always more grounded.  And these guys need get their reporting cleaned up.  Every quarter its a bunch of noise.  They point to all the metrics in their favor, and throw like 3 dozen positive stats at you, only a few consistent with the stats they gave you last quarter.

namo

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Re: LILA - Liberty Global Latin America tracker
« Reply #179 on: November 04, 2016, 01:34:32 PM »
Those are all numbers from the press release. I'm only listening to the call now.

To clarify: I simplified things in the extreme, and said "OCF has done x2.7 when the number of shares has done x4 - no wonder Mr Market looks unhappy".
This is another way to say the same thing as you: it makes us wonder whether the acquisition was overpaid (I thought the price was a bit dear myself. I mostly trust Malone, but he had interests on both sides of the transaction here.)

Another tidbit from the call: they intend to spin LILAC off in H2 2017.