Author Topic: LILA - Liberty Global Latin America tracker  (Read 97529 times)

cameronfen

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Re: LILA - Liberty Global Latin America tracker
« Reply #290 on: May 09, 2018, 07:06:00 AM »
cameronfen-Great points.  I never saw the business from that strategic perspective.

I agree overall the numbers look good.  The decrease was mainly due to Puerto Rico. I thought the big news is that PR is almost 100% back online.  Thus the numbers should improve quickly.   Stock was whacked about 20% because the market seemed to think PR will never comp back.  I hope the combination of good OCF in areas other than PR and PR getting back on-line will bring the stock back up.

I love Vodafone looking to buy Liberty Global assets to do quadplay in Europe.   It seems that Malone is trying to do Quadplay from day one in Latin America.  Hope this means good asset appreciation long term.
Quadplay is an important synergy in terms of customer stickiness, however the main thing (in my mind) is with 5G all telecos will need cable infrastructure to small cells and, maybe less significantly, with wireless broadband, all cable companies will need macro towers in case of intermittent connection with the small cells (kind of like how your phone switches to 3G when 4G is not available). 


rogermunibond

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Re: LILA - Liberty Global Latin America tracker
« Reply #291 on: May 09, 2018, 07:26:33 AM »
Does anyone really want quadplay anymore in the US?  Or for that matter Europe or LatAM?

Lots of households have broadband and cellular.  That's it.


cameronfen

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Re: LILA - Liberty Global Latin America tracker
« Reply #292 on: May 09, 2018, 07:30:40 AM »
Does anyone really want quadplay anymore in the US?  Or for that matter Europe or LatAM?

Lots of households have broadband and cellular.  That's it.
Right but even broadband and cellular is more sticky than just broadband (and getting cellular somewhere else). 

afm408

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Re: LILA - Liberty Global Latin America tracker
« Reply #293 on: May 09, 2018, 12:35:12 PM »
You think itís going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didnít expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it wonít be enough of a difference to turn this around.

No, itís not a zero, just not a good investment. The best part of thr business is what used to be in the original LILA, thr chilean cable assets, the C&W assets are just mediocre.

CHTR is just a better business, and valuation is almost thr same now. I think CHTR leverage is 4.5x, same than LILA net leverage, by CHTR is in thr US and has a more stable business, which means that their cost of debt should be less. LILA has currency risk and interest rates in local currencies are much higher than in the US, or they can take on debt USD and risk currency losses, unless they hedge them out, which also costs money.

Can you run me through the math on how Charter and LILAK are the same valuation?  Couple points that I think people are missing on value.  First, LILAK doesn't own 100% of every business, including their debt.  It only owns 80% of CWC (although 95% of its debt) and it only owns 60% of PR.  Second, PR is bankruptcy remote, so it could go to zero and not effect the other subs.  So here's the math I see:

1) Assume PR is a zero (I'm willing to bet that it's not)
2) Annualize the recent Q in OCF for CWC and VTR.  This is obviously a rough way of doing it, and I'd bet they actually see some sequential growth, but for illustrations sake let's do it.  So that gives you $918 of OCF for CWC and $420 of OCF for VTR.  That also means $733 of proportional OCF for CWC, since they only own 80% (they own 100% of VTR), so in total that's $1,153m of proportional OCF in CWC + VTR.
3) With them owning 100% of debt on VTR, and 95% on CWC, it works out to $4,900 of net debt.
4) 171m shares outstanding at $21.2, gets a market cap of $3,625.
5) That means proportional TEV of $8525 and proportional OCF of 1,153, means TEV / EBITDA of 7.4x, assuming PR goes completely bankrupt.

Run the same exercise on Charter, annualizing the last Q, and you'll get a TEV / EBITDA of 8.75x.

Now, there are arguments on multiple for both sides (CHTR is 100% cable and is not a cash tax payer on the one hand, but LILAK has lower penetration, high value subsea business, good inorganic growth oppty and this Q shows capex intensity ex hurricane to be about the same as CHTR on the other hand) but that feels like a big difference, again assuming PR is worthless. 


HalfMeasure

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Re: LILA - Liberty Global Latin America tracker
« Reply #294 on: May 09, 2018, 02:08:47 PM »
You think itís going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

The results just suck - OCF down, FCF negative, leverage worrisome. I didnít expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it wonít be enough of a difference to turn this around.

No, itís not a zero, just not a good investment. The best part of thr business is what used to be in the original LILA, thr chilean cable assets, the C&W assets are just mediocre.

CHTR is just a better business, and valuation is almost thr same now. I think CHTR leverage is 4.5x, same than LILA net leverage, by CHTR is in thr US and has a more stable business, which means that their cost of debt should be less. LILA has currency risk and interest rates in local currencies are much higher than in the US, or they can take on debt USD and risk currency losses, unless they hedge them out, which also costs money.

Can you run me through the math on how Charter and LILAK are the same valuation?  Couple points that I think people are missing on value.  First, LILAK doesn't own 100% of every business, including their debt.  It only owns 80% of CWC (although 95% of its debt) and it only owns 60% of PR.  Second, PR is bankruptcy remote, so it could go to zero and not effect the other subs.  So here's the math I see:

1) Assume PR is a zero (I'm willing to bet that it's not)
2) Annualize the recent Q in OCF for CWC and VTR.  This is obviously a rough way of doing it, and I'd bet they actually see some sequential growth, but for illustrations sake let's do it.  So that gives you $918 of OCF for CWC and $420 of OCF for VTR.  That also means $733 of proportional OCF for CWC, since they only own 80% (they own 100% of VTR), so in total that's $1,153m of proportional OCF in CWC + VTR.
3) With them owning 100% of debt on VTR, and 95% on CWC, it works out to $4,900 of net debt.
4) 171m shares outstanding at $21.2, gets a market cap of $3,625.
5) That means proportional TEV of $8525 and proportional OCF of 1,153, means TEV / EBITDA of 7.4x, assuming PR goes completely bankrupt.

Run the same exercise on Charter, annualizing the last Q, and you'll get a TEV / EBITDA of 8.75x.

Now, there are arguments on multiple for both sides (CHTR is 100% cable and is not a cash tax payer on the one hand, but LILAK has lower penetration, high value subsea business, good inorganic growth oppty and this Q shows capex intensity ex hurricane to be about the same as CHTR on the other hand) but that feels like a big difference, again assuming PR is worthless.

afm, I think you're looking at it the right way.

Spekulatius

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Re: LILA - Liberty Global Latin America tracker
« Reply #295 on: May 09, 2018, 03:41:47 PM »
You think itís going to be a 0?

http://www.lla.com/pdf/press-release/LLA-Earnings-Release-Q1-2018.pdf

Anyone have thoughts?

I havenít thought about simply removing the PR cash flow and debt from the equation. my guesstimate was from the recent 10-q $6.2B in debt -$500M in cash = $5.7B in net debt. Puerto Rico had close to $1B in debt ,so if you subtract 60% of this you get $600M in LILA share PR debt or a debt sans PR of $5.1B which seems close enough to your estimate.

I still think that LILA deserves only a lower multiple due to partly lower quality assets (prepaid wireless)higher cost of capital and just equal organic growth compared to CHTR (if that) and cash leakage ($300M for LILA if my notes are correct). I bought a starter early last year and it has been a steady drip of bad news with PR in fall being the culmination. LRBDY is almost the same, but not quite as bad. There is no reward for complexity in investing and everything being equal, simpler is better.

The results just suck - OCF down, FCF negative, leverage worrisome. I didnít expect good results and sold my starter position today and swapped the proceeds into CHTR. Much better business, similar valuation, better financed and much easier to understand.

I do think that LILA will show better metrics once PR is recovered, but it wonít be enough of a difference to turn this around.

No, itís not a zero, just not a good investment. The best part of thr business is what used to be in the original LILA, thr chilean cable assets, the C&W assets are just mediocre.

CHTR is just a better business, and valuation is almost thr same now. I think CHTR leverage is 4.5x, same than LILA net leverage, by CHTR is in thr US and has a more stable business, which means that their cost of debt should be less. LILA has currency risk and interest rates in local currencies are much higher than in the US, or they can take on debt USD and risk currency losses, unless they hedge them out, which also costs money.

Can you run me through the math on how Charter and LILAK are the same valuation?  Couple points that I think people are missing on value.  First, LILAK doesn't own 100% of every business, including their debt.  It only owns 80% of CWC (although 95% of its debt) and it only owns 60% of PR.  Second, PR is bankruptcy remote, so it could go to zero and not effect the other subs.  So here's the math I see:

1) Assume PR is a zero (I'm willing to bet that it's not)
2) Annualize the recent Q in OCF for CWC and VTR.  This is obviously a rough way of doing it, and I'd bet they actually see some sequential growth, but for illustrations sake let's do it.  So that gives you $918 of OCF for CWC and $420 of OCF for VTR.  That also means $733 of proportional OCF for CWC, since they only own 80% (they own 100% of VTR), so in total that's $1,153m of proportional OCF in CWC + VTR.
3) With them owning 100% of debt on VTR, and 95% on CWC, it works out to $4,900 of net debt.
4) 171m shares outstanding at $21.2, gets a market cap of $3,625.
5) That means proportional TEV of $8525 and proportional OCF of 1,153, means TEV / EBITDA of 7.4x, assuming PR goes completely bankrupt.

Run the same exercise on Charter, annualizing the last Q, and you'll get a TEV / EBITDA of 8.75x.

Now, there are arguments on multiple for both sides (CHTR is 100% cable and is not a cash tax payer on the one hand, but LILAK has lower penetration, high value subsea business, good inorganic growth oppty and this Q shows capex intensity ex hurricane to be about the same as CHTR on the other hand) but that feels like a big difference, again assuming PR is worthless.
To be a realist, one has to believe in miracles.

rogermunibond

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Re: LILA - Liberty Global Latin America tracker
« Reply #296 on: May 16, 2018, 07:05:15 AM »
http://variety.com/2018/biz/news/atts-directv-latin-america-ipo-spinoff-vrio-1202720505/

Does the Vrio - T spinoff of DTV LatAm assets bring a new player into the LatAm rollup scenario?  Or since it's sat TV - does no one want it?


cameronfen

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Re: LILA - Liberty Global Latin America tracker
« Reply #297 on: May 16, 2018, 10:22:10 AM »
http://variety.com/2018/biz/news/atts-directv-latin-america-ipo-spinoff-vrio-1202720505/

Does the Vrio - T spinoff of DTV LatAm assets bring a new player into the LatAm rollup scenario?  Or since it's sat TV - does no one want it?

I think spin was cancelled. 

spark411

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Re: LILA - Liberty Global Latin America tracker
« Reply #298 on: May 24, 2018, 09:19:54 AM »
Many think that the C&W acquisition at 12x EBITDA was high. In the recent quarterly earnings call, Lilak CEO says that they are utilizing less than 10% of the network capacity of the sub sea network from C&W acquisition. The 12x EBITDA does not factor in the upside of C&W's greatest asset i.e. sub sea network. Put another way, I think higher utilization of the sub sea network is a meaningful tailwind for Lilak that is being undervalues. Lilak CEO said sub sea network is being undervalued by the analyst community.

Would be interested to hear if anyone has thoughts on my line of thinking.

cameronfen

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Re: LILA - Liberty Global Latin America tracker
« Reply #299 on: May 24, 2018, 10:31:48 AM »
Many think that the C&W acquisition at 12x EBITDA was high. In the recent quarterly earnings call, Lilak CEO says that they are utilizing less than 10% of the network capacity of the sub sea network from C&W acquisition. The 12x EBITDA does not factor in the upside of C&W's greatest asset i.e. sub sea network. Put another way, I think higher utilization of the sub sea network is a meaningful tailwind for Lilak that is being undervalues. Lilak CEO said sub sea network is being undervalued by the analyst community.

Would be interested to hear if anyone has thoughts on my line of thinking.

I think (and this is just someone without industry experience talking) the main advantage of the sub sea network is the moat.  In Central and Latin America the only place where America Movil have not really a significant presence in cable fixed line presence is the Caribbeans.  This is on top of there leading/monopoly position in mobile telecoms.    Probably the main reason is the necessity for the fixed line network.  I remember reading Cable Cowboys and remember one line where the biggest fear of the cable players was the telecoms getting into the business because of there massive resources.  In Latin America, Movil is like AT&T on steroids and Comcast combined.  IMO it is a huge benefit to not have to compete with them (at least on the broadband side).