Author Topic: LBTYA - Liberty Global  (Read 271497 times)

skanjete

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Re: LBTYA - Liberty Global
« Reply #890 on: February 14, 2020, 09:29:06 AM »
So I looked at the presentation slides. The fcf includes viggo and everything. So 1 billion for 2020 includes 50 percent viggo share. You can see this on pg 14 and 15 where for 2019, 770 fcf they show the 214m fcf share from viggo. No reason 2020 estimate would exclude it.

Sorry, I made a mistake. They include the dividends and interest they received from Ziggo in adjusted FCF.

I had only looked at the press release where Ziggo isn't mentioned and hadn't seen the presentation yet.

However, they do include the dividends and interest they receive from Ziggo, but not the free cash that Ziggo actually generates, which is somewhat higher I think.


In any case I agree with posters over here that the numbers are very coloured, almost misleadingly so.
So indeed, this troubles me too.

But, even so, I still think the shares are very cheap.
« Last Edit: February 14, 2020, 09:30:43 AM by skanjete »


Munger_Disciple

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Re: LBTYA - Liberty Global
« Reply #891 on: February 14, 2020, 10:00:21 AM »
From the press release:

And while we expect some unavoidable headwinds in 2020, we believe the medium-term outlook in the U.K. remains attractive, especially as we evaluate strategic options for value creation.

Translation: UK business sucks, and we hope someone buys us out at an inflated valuation when there is a temporary uptick (Fries hopes) in the business in the medium term (whatever that means). I guess UK business sucks long term?

Munger_Disciple

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Re: LBTYA - Liberty Global
« Reply #892 on: February 14, 2020, 10:23:40 AM »
I only look at high speed fixed internet subs, and the news is not good on this front except for Poland. When you compare Dec 31, 2019 vs Dec 31, 2018 numbers, here is what I see:

Switzerland: -5.6% (661K vs. 700K)
Poland: +4.6% (1230K vs. 1175K)
UK: +0.8% (5271K vs. 5225K). UK numbers are misleading because homes passed increased from 14.4M to 14.9M in one year so penetration actually went down from 36.3% to 35.4%. This is where they are spending a s**t load of money on project lightning. 
Ireland: flat (378K vs. 376K)
Belgium: flat (1664K vs. 1658K)



scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #893 on: February 14, 2020, 11:12:51 AM »
I find it interesting that their results are below gdp growth of these nations which in turn are near zero. But I don't know if their loss is someone else's gain. Bt is doing terribly too. I think it may be regulatory. When the government handcuffs you the last thing you want is 4x leverage.

nodnub

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Re: LBTYA - Liberty Global
« Reply #894 on: February 14, 2020, 12:39:14 PM »
I find it interesting that their results are below gdp growth of these nations which in turn are near zero. But I don't know if their loss is someone else's gain. Bt is doing terribly too. I think it may be regulatory. When the government handcuffs you the last thing you want is 4x leverage.

Could it be due to younger generation migrating to mobile data plans and cancelling residential internet?  In some cities there is so much wifi access you don't even really need mobile internet (if willing to sacrifice the always-on connection for your laptop)

vince

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Re: LBTYA - Liberty Global
« Reply #895 on: February 14, 2020, 01:21:04 PM »
Lousy results, lousy 2020 outlook. The only thing that appears to go up is stock based compensation.
https://2zn23x1nwzzj494slw48aylw-wpengine.netdna-ssl.com/wp-content/uploads/2020/02/Liberty-Global-Q4-2019-Press-Release.pdf

It just looks like a melting ice cube too me.

Frustrating for sure and not performing anywhere near my original expectations.  But a multiple of 3.7 times operating cash flow is ridiculous

vince

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Re: LBTYA - Liberty Global
« Reply #896 on: February 14, 2020, 01:51:09 PM »
My sincere apologies.....thats just the net debt multiple of operating cash flow.  Multiple is just over 6, still cheap but nowhere near what I claimed

Spekulatius

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Re: LBTYA - Liberty Global
« Reply #897 on: February 14, 2020, 02:52:40 PM »
Lousy results, lousy 2020 outlook. The only thing that appears to go up is stock based compensation.
https://2zn23x1nwzzj494slw48aylw-wpengine.netdna-ssl.com/wp-content/uploads/2020/02/Liberty-Global-Q4-2019-Press-Release.pdf

It just looks like a melting ice cube too me.

Frustrating for sure and not performing anywhere near my original expectations.  But a multiple of 3.7 times operating cash flow is ridiculous

It also has 3.7 turns of net debt. So equity is half the capital structure and the valuation is 7.4x cash flow. This is cheap, but itís not that cheap if it is a shrinking business.

I kind of kick myself for net selling earlier or at least at the open today. I generally find that itís best pull the weeds early. My underlying assumption was that the shrinking business would stabilize this year, but itís just not happening. Then we have to discount weak management on top of that sickly business with a levered capital structure. It just doesnít seem like a straightforward way to win.
Life is too short for cheap beer and wine.

NotSoWise

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Re: LBTYA - Liberty Global
« Reply #898 on: February 16, 2020, 12:38:36 AM »
I thought for a moment about alternative scenario - that CEO tries to keep the numbers down to take it private with PE help. But then what does not fit with the story is recent lowering capex to boost CF. If that was CEO's plan, he wouldnt do it probably to such large degree. The reason to lower capex seems mainly rather high debt (covenants) and possibly low return on capex growth. This 11bn liquidity (3 revolver) is BS I think - this is the reserve to pay down debt on a declining EBITDA situation with high leverage (3,6x after using all cash is more adequate in this deteriorating situation). This is why there is only 1bn on buybacks in 2020. Possibly more if they exit more subsidiaries (e.g. Poland, etc).

So all in all, I think operating situation is quite poor, they feel threatened by high debt (with EBITDA going down - unthinkable still one year ago) and took measures to keep money if things go down more or not improve. In the mean time they may try to exit some businesses at hopefully above 10x (but not obvious for all subsidiaries unless synergies for new buyer - e.g. but we had Swiss situation, even despite synergies). New liquidity from exits will go to debt repayment and possibly buybacks. So I think the perceived discount is probably not as big as it looks when compared to 11x multiple. In Vodafone deal they sold a better part of the company. What remains is more like 8-9x with synergies for the buyer. On top, the unknown variable is time => +/- 40% upside in 2 years is not the same as 40% upside spread over 5 years (its in Mike's interest to prolong things given his salary and Malone's age). My experience is that time variable "fuc..ed" several value situations (e.g. took 2-3 years longer) and then returns were mid/ high single digits, rather than low/ mid teens.

Overall, I dont find it attractive after some thinking. One may not lose money from current price, but also may not make a lot from this over the next 5 years. This business is a dog and its CEO is terrible.

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #899 on: February 16, 2020, 02:53:21 AM »
Mike said it right. They must improve operation if they want to have a chance at a sale at 10x+. Who will buy it now ?

Also 11 billion is double bs. It includes 3 billion of their line of credit ! When they got 25 billion of bond debt on top. Talk about loose with the truth. Sounds like chest thumping like we can take out all the shares with the liquidity. Possible, but reckless.

Everything hinges on your view of the UK and Western Europe . In 5 years is uk going to be thriving like an independent nation ? Well there is still competition and regulation. Look at Shaw in Canada. Canada is independent. It has free trade deals with others. It does not mean regulators don't gut the telecom business considering it a strategic national asset with pricing caps and wholesaling.
What fries (and Malone too) need to ask is if the economics of this business make sense outside the USA. Perhaps one can get a 8 to 10 percent a year return from here. Better than a bond for sure but I don't think cable Telecom stocks outside USA should be managed with 3.7x debt when returns are so low. To me this is a business in Europe where all the benefits accrue to consumer (both mobile and fixed ) and all the costs and speed upgrade capex accrue to the company. If you can raise prices 2 percent a year , perhaps you should invest less. I am surprised by all these overbuilders. What kind of returns are they getting? We see the dark side of low interest rates where people are so desperate that they will take even a few percent above the cost of massive debt . Someone in the future is going to have a wile e. Coyote moment, just don't know when!


« Last Edit: February 16, 2020, 02:58:15 AM by scorpioncapital »