Author Topic: LBTYA - Liberty Global  (Read 294954 times)

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #810 on: January 08, 2020, 01:57:36 AM »
https://www.ispreview.co.uk/index.php/2020/01/ofcom-start-major-review-to-boost-uk-full-fibre-broadband-market.html

Anyone have a view of these regulatory changes in the UK are positive, negative or neutral for virgin ? It seems higher speeds may be deregulated but there are still some caps on copper.


Spekulatius

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Re: LBTYA - Liberty Global
« Reply #811 on: January 08, 2020, 04:07:52 AM »
https://www.ispreview.co.uk/index.php/2020/01/ofcom-start-major-review-to-boost-uk-full-fibre-broadband-market.html

Anyone have a view of these regulatory changes in the UK are positive, negative or neutral for virgin ? It seems higher speeds may be deregulated but there are still some caps on copper.

Seems positive on a first look. Lower speed capped to inflation, higher speed pricing unregulated, certainty for 5 years rather than 3 years.
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scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #812 on: January 08, 2020, 08:29:24 AM »
So far it seems the market does not like anything about virgin network / liberty competitive dynamics. Sometimes I think eu / uk / canada / Australia have regulated the profit out of the industry to a level the USA has not (just look at performance of lbrdk vs lbtyk). Not sure if this industry is even as good as a public utility. At least in that case you tend to have a single power supplier not 2 or 3.

NotSoWise

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Re: LBTYA - Liberty Global
« Reply #813 on: January 08, 2020, 09:48:48 AM »
This looks like a flattish story, so people may not want to wait few years when it reaches its intrinsic value via buybacks (if ever...) to get 30-40% return over 3-7 years. Unfortunately I have it since 4 years at -35%, but will wait till Feb 13 and then decide what to do with it. Mike should give some light on buybacks going forward.
I am from CEE and my intelligent(?) guess is that they will try to sell Polish operations in 2020 (nice fit to T Mobile). I dont have a strong view re other subsidiaries, but would tend to think they also may try to sell (if its possibe - which I dont know)

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #814 on: January 13, 2020, 09:24:37 AM »
Does anyone know if full fiber to the premises (fttp) will cause hybrid coaxial (fttc) to be obsolete? Virgin has mostly fiber to the cabinet. My thinking is that final result is what matters not method. If both are delivering 1gbps does it matter how it's accomplished? On the other hand I see a global trend to full fiber and wondering if hybrid older systems like virgin's will be obsolete and requiring lots of capex to upgrade to full fiber.

Btw Interesting article https://www.measuringthemoat.com/post/liberty-global-video-kills-the-radio


Mungerish

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Re: LBTYA - Liberty Global
« Reply #815 on: January 13, 2020, 02:10:27 PM »
I am getting the feeling the they are going to try and Charterize LBTYA. Let some subs roll off and focus on free cash flow and data thru fiber and your CAPEX drops due to few set atop box investments, etc. CHTR is a US only story, so slightly different, but the CFO of LBTYA mentioned that same idea at a MS conference and Malone has been highlighting that thesis in these transcripts

https://www.cnbc.com/2019/11/21/cnbc-exclusive-cnbc-transcripts-cnbcs-david-fabers-interviews-from-liberty-media-investor-day-today.html

https://www.cnbc.com/2018/11/14/cnbc-exclusive-cnbc-excerpts-liberty-media-chairman-john-malone-speaks-with-cnbcs-david-faber-today.html

Spekulatius

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Re: LBTYA - Liberty Global
« Reply #816 on: January 13, 2020, 03:24:06 PM »
I am getting the feeling the they are going to try and Charterize LBTYA. Let some subs roll off and focus on free cash flow and data thru fiber and your CAPEX drops due to few set atop box investments, etc. CHTR is a US only story, so slightly different, but the CFO of LBTYA mentioned that same idea at a MS conference and Malone has been highlighting that thesis in these transcripts

https://www.cnbc.com/2019/11/21/cnbc-exclusive-cnbc-transcripts-cnbcs-david-fabers-interviews-from-liberty-media-investor-day-today.html

https://www.cnbc.com/2018/11/14/cnbc-exclusive-cnbc-excerpts-liberty-media-chairman-john-malone-speaks-with-cnbcs-david-faber-today.html

Capex is 22% of the revenues now for LBTYA - if they can get it to ~12% like CMCSA or CHTR, this company will be gushing astonishing amounts of cash.
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Mungerish

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Re: LBTYA - Liberty Global
« Reply #817 on: January 13, 2020, 03:56:25 PM »
From the MS conference in Nov 19 RE CAPEX:
 Charles H. R. Bracken
Executive VP & CFO
 
So if you look at 2018, we spent about $1.06 billion of OpEx and CapEx at the center, which sounds like, wow, that's a big number. And I would split that into 2 numbers. We spent $800 million on what we call technology and innovation. And we spent $260 million on what I would describe as classic corporate.
 
 
But let me kind of talk a bit about it. So technology and innovation, what we essentially did before we started breaking the company up was we centralized an enormous amount of our technology spend. So what does that mean? We didn't bother to develop a different set-top box platform in every market. We did not bother to develop a separate connectivity platform in every market. We did not ask every company to negotiate its own backhaul across Europe. We did that centrally. We did not ask them to develop a central product suite for things like mobile and B2B. And we also, from a legacy, we also ran a lot of the IT centrally. This is back -- way back in the day when we had a lot of small countries when, in fact, Holland was our biggest country. We had a system called [ Darby ]. So Ireland and Slovakia and Switzerland, all these countries have shared a common IT platform.
 
 
So that, we spent $800 million. And what we did internally was re-charge that back into the countries. And it was never particularly explicit to investors because we didn't provide that level of disclosure because we were doing an integrated story. It became explicit when we did these TSAs because, in effect, Austria can't work without access to our video platform. Vodafone Ziggo can't work without access to... well, that was the first one. And so -- and also, we'd reached the peak in the investment cycle. So the numbers are that technology and investment number goes from $800 million in 2018, $700 million this year and will go $600 million next year. That's the first piece of news.
 
 
Secondly, and you've got to be quite an analyst to kind of figure this out, but if you annualize all the TSAs, you reach the conclusion that the operations that we retain, Switzerland, U.K., Poland, Slovakia and Ireland, are bearing $300 million of the cost this year. Of the $700 million, $400 million is the stuff we sold, $300 million is what we retained. And we believe that, that $300 million a year re-charge will be flat to down over the next 6, 7 years.
 
 
And why are we so confident in that? Because a lot of this cost is third-party flex costs. Our internal labor is only about 10%. It's contracts and licenses. So for example, when Vodafone Ziggo goes off the Darby platform, we will cancel or end those licenses and the flex costs will flex down. And so we're very comfortable that the net re-charge -- just to reiterate, the $300 million, which is divided between those retained companies, will remain. And we're going to start breaking that out for you in our 10-K or -- I think we do in 10-K, but certainly in 10-Qs next year, we're going to show you the cost before and after that re-charge. So investors can see the underlying free cash flow of each of the assets.
 
 
And then the last bucket was the corporate overhead, which is $260 million. We have reduced that by 30%. So it's going to be about $230 million this year, it will be $200 million next year, which has gone through with significant headcount reduction because it's largely headcount. And that's obviously been painful, but it's done. And so that's hopefully where we stand. So the way to think about it is you look at the underlying free cash flow of our businesses, and we try to break that out; and then there's a $200 million corporate overhead and you should decide how you want to value that.
 
 

Mungerish

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Re: LBTYA - Liberty Global
« Reply #818 on: January 13, 2020, 03:59:56 PM »
Comments re: CHTR

Benjamin Daniel Swinburne
Morgan Stanley, Research Division
 
Yes. Yes, because I think in video, you are seeing some of what we see in the U.S., which is your content costs are growing, what, high single digits this year, somewhere along those lines. It's not a sustainable...
 
 
Charles H. R. Bracken
Executive VP & CFO
 
I agree with that. And the danger in our content deals is basically 2 guys, BT Sport and Sky, and these are essentially 4- to 5-year renegotiations. So that will taper down and measure off, depending on where you are in the cycle.
 
 
But I think you're making the right point, that the model on video -- I'm [indiscernible] Eric Zinterhofer, who is the Chairman of Charter, a couple of weeks ago, and he was saying, to some extent, the U.S. is very relaxed because it's a totally variable model. They don't really mind. And I mean really, the key cash flow growth is coming out of broadband. And I would say Virgin, particularly, that's very much an analogy. We're similar in that respect to the U.S.

forest81

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Re: LBTYA - Liberty Global
« Reply #819 on: January 14, 2020, 12:49:39 AM »
I think this is a big takeover play here. As Malone says I think Sky/Comcast has to transition to over the internet. Well they are not going to want to piggyback on someone else's pipes. There are only 2 companies they can buy BT or Global. BT are mainly over copper phone wires and is a quasi government business. Vodafone can't just stay doing mobile/4g they need fixed wired capability and I can see them being very interested. Brookfields would be interested as they are looking for infrastructure assets. I think in the UK if you are looking for a high speed internet company with decent footprint there is only Global that you can buy. There are certain other players who are trying to build fibre but it will take too long to get anywhere near Globals spread. With the price that Global is trading at the minute would not be surprised to see it getting taken out very soon. Those pipes are very valuable. The main risk will be regulatory in my opinion.