Author Topic: LBTYA - Liberty Global  (Read 252850 times)

forest81

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Re: LBTYA - Liberty Global
« Reply #730 on: October 22, 2019, 12:48:03 AM »
Deals off as per FT 5 mins ago.


scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #731 on: October 22, 2019, 06:58:02 AM »
Seems the market believes the entire upc Switzerland is a write off?

maybe4less

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Re: LBTYA - Liberty Global
« Reply #732 on: October 22, 2019, 09:55:44 AM »
Seems the market believes the entire upc Switzerland is a write off?

That's what Sunrise's CEO is saying: that the deal is off. Maybe a bargaining tactic though. Hard to say.

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #733 on: October 22, 2019, 01:20:08 PM »
It's quite interesting both upc and sunrise said they will focus on going it alone..yet the deal is technically on until Feb 2020. What could happen ? A lower price ? A joint venture ? Maybe a partial sale like 51 percent? I presume that the contract says they can't shop a 3rd party while the deal is still technically pending? Or freenet sells their shares to liberty in exchange for sunrise buying upc with liberty owning 25 percent of the larger more competitive Swiss provider? This actually seems like a better idea and would conform to their Netherlands Belgium and other joint venture deals. Definitely safer way to get it off the books in a 2 step process.
« Last Edit: October 23, 2019, 03:14:12 AM by scorpioncapital »

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #734 on: November 13, 2019, 08:26:40 AM »
Now that the deal is off, any thoughts on the all time new low price? Is Europe - including UK a broken model for fixed broadband, an experience that will be perpetually different than the same kind of investment within the USA due to regulatory issues and negative interest rates where even if a 5G network or any network costs tens of billions to build there is nothing but free-dumb money flowing into it , a race to the bottom with rational actors like Liberty stuck in the middle?

dontdodebt

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Re: LBTYA - Liberty Global
« Reply #735 on: November 13, 2019, 10:15:19 AM »
I would also be thankful if everyone that see risks with this business to explain what they are.

Obviously there business has a lot of complexity and because of the high leverage, you do not want anything to go south since the equity can easily dissapear.

However, given their new laser like focus on divesting business they can sell for premium prices going forward, all time high quality of premium services and products, bringing down the complexity, increasingly cash flows because of lower need for growth/upgrade costs going forward, massive share buy backs....given the cash flows and the strategic plan this have the potential to be a 3x or with some luck even more per share or something like that in 5 years IMO.

Clearly, the market is very skeptical and I would like to learn why.
« Last Edit: November 13, 2019, 10:16:57 AM by dontdodebt »

vince

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Re: LBTYA - Liberty Global
« Reply #736 on: November 13, 2019, 10:18:22 AM »
Now that the deal is off, any thoughts on the all time new low price? Is Europe - including UK a broken model for fixed broadband, an experience that will be perpetually different than the same kind of investment within the USA due to regulatory issues and negative interest rates where even if a 5G network or any network costs tens of billions to build there is nothing but free-dumb money flowing into it , a race to the bottom with rational actors like Liberty stuck in the middle?

Not at an all time low, and although there is a chance of a race to the bottom, it's not likely in my opinion. Furthermore, even if it does happen to be more competitive, Global's assets are still valuable and today's price is VERY unlikely to be expensive relative to true value.  Having said that, I was too confident about their future prospects looking out from 2014 and I have definitely been wrong.  But after 5 years and a substantial loss, I think it would be crazy to sell at these prices.  The business is selling for prices that assume a long modest decline, yet their operating cash flow has grown every quarter, yoy, for 10 years (there may be one or two qtrs where they didn't actually grow) and it looks like that will continue (at low single digit rates) for the most part.  On top of that, I can't think of another person I would rather have navigating this exact situation than Malone and if the growth rate over time does in fact turn to negative low single digits, I think it will still be a profitable investment from these prices.  Historically, and ESPECIALLY within the last few years, the market has been overly punishing to businesses that are not living up to analyst expectations, businesses that are not growing, and most notably businesses that have negative growth rates, over multiple quarters, even when the assets in question are very defensible over time.  I have seen quite a few stocks with a 5 handle over the last couple years.  When interest rates are at 2%, a 5 handle doesn't make sense for a reasonably good business, an owner oriented mgmt (This is where owner friendly mgmt's can create enormous value relative to widespread pessimism), and a plan that makes sense for preserving value.  I admit it can be very hard to disregard the current stock price and focus on the few variables that carry most of the weight, and sometimes you will be just plain wrong, (but here you have to be careful distinguishing between being wrong versus having a fundamentally sound process but still turned out to be wrong) but having the proper temperament, in my experience, has produced some amazing winners.  To be fair, it has also produced a few losers and it opens you up to looking very foolish.  I will take the net profits over looking foolish occasionally, all day long.

dontdodebt

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Re: LBTYA - Liberty Global
« Reply #737 on: November 13, 2019, 12:00:36 PM »
I also think that their strategy going forward of having the goal of selling at premium prices when they can, buy back stock and maybe deleverage all in all will decrease risk and in the end will have a lollapalooza effect. Obviously, if they manage to succesfully divest the less efficient operations for premium prices to someone that will have a better use for the asset, focus and keep their best assets WHILE the stock price is depressed, then this could turn out to be one of the best investments world wide the coming 10 years.

The problem I think is that, at least for me, it is very hard to build a good understanding of the business as a whole, risks, opportunities, regulations and so on. My understanding of it in general is so bad that a lot of bad things could happen that Iīm not aware of, and that is why I still donīt want to build a major position in this.

vince

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Re: LBTYA - Liberty Global
« Reply #738 on: November 13, 2019, 01:00:36 PM »
I also think that their strategy going forward of having the goal of selling at premium prices when they can, buy back stock and maybe deleverage all in all will decrease risk and in the end will have a lollapalooza effect. Obviously, if they manage to succesfully divest the less efficient operations for premium prices to someone that will have a better use for the asset, focus and keep their best assets WHILE the stock price is depressed, then this could turn out to be one of the best investments world wide the coming 10 years.

The problem I think is that, at least for me, it is very hard to build a good understanding of the business as a whole, risks, opportunities, regulations and so on. My understanding of it in general is so bad that a lot of bad things could happen that Iīm not aware of, and that is why I still donīt want to build a major position in this.

What makes it so difficult for you to understand?  The most important thing to focus on is their position with their cable plant relative to what's out there now and what's coming.  If their coax/fiber infrastructure remains superior (fiber is superior in terms of performance but the capital intensive nature of fiber doesn't make economic sense especially when coax will be sufficient for many years to come) in terms of cost/performance, then the business is defensible......value should rise at least modestly over time probably in line with nominal gdp.  Probably a good idea, if you are interested, to focus your research on the characteristics of the cable plant and acquire the confidence needed to hang in there when the stock price goes crazy.  Obviously you will need to spend some time on their potential financial risk etc but the most effective process, imo, is to narrow down the thesis to the few critical variables that are potentially knowable and to ignore noise (make the proper adjustments where noise is present) and variables that are unknowable.  Once you understand the value drivers and the probabilities around sustainability of the plant then you can move on to valuation.  I think you will find that it's not that difficult to put a pretty tight sum of the parts value range on the various geographical assets.  There are many comps, both recent and historical.  In addition, I find it fairly easy, once you understand the industry to accurately predict what the true current earning power is of the various assets, which is absolutely critical when there is a transition going on, lots of acquisitions, lots of asset sales, lots of noise.  It's a powerful advantage when you can ignore what people are saying because you know roughly what their earning power is.

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #739 on: November 13, 2019, 03:50:44 PM »
https://www.telecomtv.com/content/5g/why-sunrise-is-going-to-double-down-on-5g-36822/

https://www.cnbc.com/2019/11/12/common-networks-bets-5g-will-replace-cable-internet-in-your-home.html

It seems 5G could make fixed broadband a dead business. Anyone think it's premature or is this happening before our eyes and fixed broadband investments are going to zero..slowly?

« Last Edit: November 13, 2019, 03:54:42 PM by scorpioncapital »