Author Topic: LBTYA - Liberty Global  (Read 277313 times)

Spekulatius

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Re: LBTYA - Liberty Global
« Reply #900 on: February 16, 2020, 05:23:05 AM »
LBTYA starts to trade at similar multiples than the European telecom giants like Orange (formerly France Telecom) and Deutsche Telecom, even though the latter have arguably generated better numbers , have better balance sheets and pay dividends. DTE at 7.3x EV/EBITDA and a large Part of this is the US business, Orange trades at and even lower multiple and has generated at least stable to slightly rising numbers and has lower leverage. Both have FCF yields in the 10% range, which is higher than LBTYA.

Fries 1B buyback estimates for 2020 equals his FCF projection. I agree his 11B in liquidity is not real and I think he needs to use it to reduce debt. With a 4% interest rate, his cost of debt is actually pretty high for Europe.

LBTYA ability to create shareholder value hinges upon Fries being able to pull off a good deal and sell out. organically from operations, i just don’t see it happening. Their UK pivot so allow other competitors access to their lightning network pretty much guarantees, that the returns in this part of the business are going to be mediocre at best.
« Last Edit: February 16, 2020, 05:59:36 AM by Spekulatius »
Life is too short for cheap beer and wine.


ABM

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Re: LBTYA - Liberty Global
« Reply #901 on: February 16, 2020, 01:33:34 PM »
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).


Agree with this due to very low interest coverage ratios no matter which way you slice it.  Easiest calc to see LBTY's troubles is (EBITDA-Capex) / Int. expense and creditors don't accept OCF as the baseline for EBITDA. 

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #902 on: February 17, 2020, 05:06:05 AM »
Brexit is not really over. I'm curious if this may have something to do with it. Maybe 2021 will be much better. Time will tell.

sundin

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Re: LBTYA - Liberty Global
« Reply #903 on: March 09, 2020, 02:17:13 PM »
@ $ 17.5, the cash on the balance sheet is almost worth the market cap on this now and its still generating good cash flow.

Seth Klarman has about a 15% bet on this now too.



Foreign Tuffett

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Re: LBTYA - Liberty Global
« Reply #904 on: March 09, 2020, 02:21:47 PM »
@ $ 17.5, the cash on the balance sheet is almost worth the market cap on this now and its still generating good cash flow.

Seth Klarman has about a 15% bet on this now too.

With all due respect, that is a meaningless fact without taking the debt load into consideration. Countless companies are cheap if you ignore debt entirely. 

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #905 on: March 09, 2020, 02:24:13 PM »
Countless companies are also cheap if you ignore expenses )


sundin

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Re: LBTYA - Liberty Global
« Reply #906 on: March 09, 2020, 02:31:06 PM »
Yes agreed.. no stake in this yet because of the debt but the cash flow looks stable to service. Outside of repurchasing shares, I think selling some assets could be a catalyst. 

dwy000

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Re: LBTYA - Liberty Global
« Reply #907 on: March 09, 2020, 07:41:58 PM »
@ $ 17.5, the cash on the balance sheet is almost worth the market cap on this now and its still generating good cash flow.

Seth Klarman has about a 15% bet on this now too.

With all due respect, that is a meaningless fact without taking the debt load into consideration. Countless companies are cheap if you ignore debt entirely.

It's relevant because of the 2nd part of the comment (the unbolded part).  Positive cash flow after debt service trading at cash value.

scorpioncapital

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Re: LBTYA - Liberty Global
« Reply #908 on: March 10, 2020, 02:17:48 AM »
You have a point in that they could do a leveraged buyout with only the cash on the balance sheet. Or you might think of it as a short seller squeeze should there be a credible offer to do so.

thefatbaboon

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Re: LBTYA - Liberty Global
« Reply #909 on: March 10, 2020, 02:50:29 AM »
It is worth paying attention over the coming days to the budget in the UK.  Boris Johnson has just won a resounding election.  The UK does not have the same level of constitutional offsets as USA (president/senate/house) or political confusion and sausage-making as EU.  And gilts recently headed into negative territory, oil is weak and sterling has been strong.  It is a perfect situation for Boris Johnson to borrow big and spend.