Author Topic: LILA - Liberty Global Latin America tracker  (Read 144195 times)

alwaysinvert

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Re: LILA - Liberty Global Latin America tracker
« Reply #410 on: August 27, 2020, 12:49:28 PM »
Tigo already is an integrated player in all their countries except... Costa Rica. So, it would not make any sense to put off buybacks for that reason and they didn't until the full covid effect struck - they were fully committed to repurchases. Like I wrote somewhere earlier, either Tigo and LILA can swap assets to both integrate more markets or they can do the full merger. Tigo also has some more slack in non-core assets left to dispose of.

The only major strategic goal Tigo has left to achieve in their markets is competitive stability in Colombia, which has been put in question again now by WOM buying up the bankrupt Avantel and, perhaps illegally, lending them spectrum. There is a court case initiated by Claro trying to curb their progress.

On the subscription - my assumption is that there will be a possibility to subscribe to shares without rights which will be filled by insiders provided that some rights go unused. LILA will likely get the full sum in the end. But we will see when the complete terms are out and maybe they change the number before that.


dcollon

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Re: LILA - Liberty Global Latin America tracker
« Reply #411 on: September 11, 2020, 02:26:15 PM »
Anyone having an opinion on the rights?

jgyetzer

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Re: LILA - Liberty Global Latin America tracker
« Reply #412 on: September 12, 2020, 08:52:59 AM »
It depends on your view of LILA itself.  I am participating and will oversubscribe if available.  The company looks cheap to begin with and there is also a bit of a "play the man, not the cards" component.  I see Malone and management taking an opportunity to put cash into the business to be used for ongoing network expansion and upgrade along with acquisitions.  I think the market has a much dimmer view of the company's prospects and ability to survive COVID as well as its reasons for the rights offering (i.e. it needs cash to survive and will just result in dilution).

As for the rights pricing, it seems about right compared to current LILAK price.

CorpRaider

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Re: LILA - Liberty Global Latin America tracker
« Reply #413 on: September 12, 2020, 11:49:42 AM »
Yeah seems like it's priced "fully" peeps must be ascribing some option value to the potential over-subscription rights.  IDK at $9 ($10 bil), I'm kind of thinking why not just buy $CMCSA?

jgyetzer

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Re: LILA - Liberty Global Latin America tracker
« Reply #414 on: September 12, 2020, 12:39:10 PM »
Yeah seems like it's priced "fully" peeps must be ascribing some option value to the potential over-subscription rights.  IDK at $9 ($10 bil), I'm kind of thinking why not just buy $CMCSA?

I'm not sure I follow.  Are you saying that if LILA has an EV of $10B, then CMCSA is your preferred investment?  I agree US cable seems attractive.  Just wondering why it's CMCSA vs. LILA.

And yes, I think you're correct about the option value of over-subscribing.  I bought a small amount for that reason yesterday.

CorpRaider

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Re: LILA - Liberty Global Latin America tracker
« Reply #415 on: September 12, 2020, 01:59:46 PM »
Sorry. Yeah, basically if I'm not getting a material/any discount (not enough $$$ to really hammer any oversubscription I'm offered).  Just using cmcsa as the opportunity cost/hurdle bc it's trading cheapish/in the same zip code (if I'm getting no discount).
« Last Edit: September 12, 2020, 02:15:55 PM by CorpRaider »

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #416 on: September 12, 2020, 02:17:43 PM »
Yeah, basically if I'm not getting a material/any discount (not enough $$$ to really hammer any oversubscription I'm offered).  Just using cmcsa as the opportunity cost/hurdle bc it's trading cheapish/in the same zip code (if I'm getting no discount).

Comcast is trading at a discount mainly because of NBCU and Sky. The cable division is trading for an EV of 9.7 times EBITDA on a look-through basis if you assume a current multiple of 7 for NBCU+Sky. It is amazing that they paid nearly 20 times EBITDA for Sky; a very poor capital allocation decision. Instead they should have just bought back a ton of stock like Charter. 
« Last Edit: September 12, 2020, 02:32:50 PM by Munger_Disciple »

CorpRaider

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Re: LILA - Liberty Global Latin America tracker
« Reply #417 on: September 12, 2020, 05:38:13 PM »
Yeah, I don't get Sky.  I feel like, go forward, that capital burned via a bad move is largely the problem of the guy selling to me at a price discounting that move. 

I'm not sure about Roberts (I had no idea McDonalds CEO was reportedly faxing nudes all over the place either) but I do like that he seems to understand the Disney model, was smart enough to try and buy it; having failed in that endeavor is trying to (sort of) replicate it, and is probably the only guy in media with the potential to actually do it (given the whole lifetime tenure thing).  I wonder if he can get more of the potter rights over time.   

I am not as negative on the legacy media providers (not saying it should be valued the same as chtr).  I think once things settle down and re-aggregate and/or the capital markets enforce some financial discipline on some new entrants (and the dumb money, i.e. AT&T) it will be ok.
« Last Edit: September 12, 2020, 05:59:56 PM by CorpRaider »

alwaysinvert

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Re: LILA - Liberty Global Latin America tracker
« Reply #418 on: September 21, 2020, 01:45:22 PM »
I think this is now a potentially very good situation. Price is below the post-covid lows of the spring, whereas TIGO, which it usually pair trades with, is up 50% from them. The stock never got a chance to find its proper market price off of perfectly fine Q2 results due to the rights offering (not accidentally in my view). LILA, just like TIGO, has improved its position significantly with recent m&a and potentially has a chance to do more in the next little while.

I know everyone and their mom have been burned on this name by paying up for growth which never materialized and instead got hit with a stinging multiple contraction. But I'm sticking my neck out now and saying there is value here at this point. It's cheap on all the classic metrics, covid wasn't a giant catastrophe, the business is way stickier than it gets credit for and management is bullish. If this goes from approx a 5x ev/oibda at $8 with 231m shares outstanding to a 6x the stock is almost a double. A price pop like that can be achieved via some better sentiment, which has already happened to the rest of the sector, or via delevering or via m&a. Multiple outs.

To me it seems extremely likely that this rights offering was partly constructed for insiders to get more money into the situation without paying up. I can't oversubscribe the rights offering due to my jurisdiction, but I hope all US holders are strongly considering doing it.

Just so I don't sound unreasonably bullish; yes they are in s-hole markets; yes the multiple can contract further; yes they are very levered; yes you should probably buy CHTR and triple your money instead because nothing outside of the US can ever give good returns.

NotSoWise

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Re: LILA - Liberty Global Latin America tracker
« Reply #419 on: September 22, 2020, 11:55:01 PM »
After being 4 years too early in LILAK, I pretty much have same view as alwaysinvert - I hope it is not a nice, self-reinforcing groupthink.

I run some simple model to see how it works on the returns, with key assumptions below:
- no disruption to the business - so no hurricanes, much less COVID and no Venezuela in one of the countries they operate in, no overpaying for some other business from Malone
- 3% OCF growth
- leverage at 3.9x
- 10-12x FCF exit multiple
Other: no TIGO merger, no M&A and all money to buybacks at reasonably conservative and increasing prices going forward, reasonable OCF to FCF conversion plus on top 30% of business FCF taken off arbitrarily - but not from extra debt (cash from extra debt taken at 100% value).

=> you get to USD 38-48 per share in 5 years. If you put 0% OCF growth and 7x FCF exit, you get to USD 18.

Dont want to get into discussions about assumptions, my point is if you run the model yourself, you will end up more or less at similar level of returns.

The key assumption is no business disruption over the next 5 years - something which is close to random and independent to some degree from each other and between years. Given its LATAM, disruption is more likely to happen there than e.g. in US. Just to remind, in the past 4 years we had: PR hurricane, C&W fu... up (from LILAK side, from Malone side was ok), COVID. Its a big and optimistic assumption, driving the returns.