Author Topic: TIGO - Millicom  (Read 17321 times)

dwy000

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Re: TIGO - Millicom
« Reply #70 on: March 25, 2020, 07:48:05 PM »
I saw that as well and I may be reading the disclosure wrong, but it looks like a disposition - possibly a margin call because it says "forced liquidation."

Oh my! I read the document WAY too fast :o
Thanks for pointing out my mistake.

Does that make you uneasy as a shareholder?  It does me.  How can a CEO make prudent, long-term decisions when under this kind of personal, financial pressure?

Personal financial pressure?  It looks like shares got sold for a margin call.  I'd be more concerned that he owns less shares to be motivated by.


WayWardCloud

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Re: TIGO - Millicom
« Reply #71 on: March 25, 2020, 07:49:12 PM »
I saw that as well and I may be reading the disclosure wrong, but it looks like a disposition - possibly a margin call because it says "forced liquidation."

Oh my! I read the document WAY too fast :o
Thanks for pointing out my mistake.

Does that make you uneasy as a shareholder?  It does me.  How can a CEO make prudent, long-term decisions when under this kind of personal, financial pressure?

I think your comment is straight on point.

This is a very different signal being sent than if he had executed a normal (non forced) disposal of shares.
On the plus side, I am not worried that he might be selling because he knows something we don't.
This is the same guy who bought 2.5M worth of shares at $54, more than twice the forced sell price, just nine months ago.

At the moment I am not worried about Ramos having set up the company as poorly (or I should say as aggressively because that could have played the other way) as his own portfolio for two reasons:
1/Liberty Latin America's leverage is much higher as a percentage of EBITDA than Millicom's so I would expect them to get in trouble first, which is not the case as of now. Although I'd say Digicel is the true coal mine canary here and they are definitely gasping for air so I guess Liberty could be next.
2/About 2/3rd of their debt isn't local currency but USD interest rates dropping should help keep the debt manageable despite the strengthening of the dollar.

To put things in perspective, Ramos went from owning 190k share = $5.3M to 160k shares = $4.5M.
It definitely shows his past overconfidence/greed and hopefully this episode will humble him.
I wonder how much leverage he is still under and whether we'll see more forced selling if the shares were to tumble again.
I kind of just... feel bad for the guy.
« Last Edit: March 25, 2020, 08:01:57 PM by WayWardCloud »

compounding

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Re: TIGO - Millicom
« Reply #72 on: March 26, 2020, 03:48:51 AM »
I don't think Ramos is too worried about his personal financial situation right now. He still owns 165k shares and will hopefully be gainfully employed as a CEO for a long time to come.

The buyback has not been inconsequential with regards to their current authorization. On the contrary, they blew through over 1/3 of the total amount authorized until May 5th in one day (curiously enough the day before Ramos' margin call). After that the pace has slowed down again, but they only have authorization to buy another 21k shares until May 5th. So either they expand the current authorization or buybacks will be muted until at least May 5th.
@JohanHjortsson

jgyetzer

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Re: TIGO - Millicom
« Reply #73 on: April 30, 2020, 04:25:46 PM »
Quarterly conference call was sobering.  Cancelled dividend and buybacks in order to maximize liquidity.  Ongoing losses in mobile.  However, they are still growing broadband subscribers which is the most valuable service-line.  I appreciated management’s humble tone.  The call was no-nonsense and focused on maintaining customer relationships and financial strength in order to exit the crisis ready to thrive.  Mauricio mentioned in Q&A that they question whether they are being overly cautious, but I prefer that to a sugar-coated approach.  Obviously the business is suffering, but at the current price the market seems to expect unlimited, ongoing quarantines and depression.  Any scenario other than that will look great.

Anyone else listen? 

https://edge.media-server.com/mmc/p/c2qerkke/dmediaset/audio

WayWardCloud

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Re: TIGO - Millicom
« Reply #74 on: April 30, 2020, 11:37:12 PM »
So we have : dividend cut, buyback cut, opex cut, capex cut AND a previously agreed upon deal in Costa Rica being walked back over some technicality.

Maybe Ramos is way over-reacting.
Maybe all hell is about to break loose on LatAm (virus+recession+FX?).
Or maybe he's using the crisis as an excuse to load his "big bazooka" ( ::)) because he has an acquisition target in mind. The expression sounds an awful lot like Buffet's "elephant riffle" and remember Telefonica is trying to divest the region in a rush. However, I don't see how treating them so unfairly in Costa Rica would conduce to good negotiation over acquiring the rest of their countries.

alwaysinvert

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Re: TIGO - Millicom
« Reply #75 on: May 01, 2020, 03:56:37 AM »
A speculation is that the large swoop of dividend cuts on the Swedish stock exchange already happened a while ago and that investors thought this one was safe now. They also didn't put in any hedging language about evaluating the situation in the fall with regards to  capital returns which has been customary. So I think they spooked the market. Me myself I would be happy for the dividend not to return at all. 

As for the actual operations, I didn't find anything very out of line with my expectations. The one thing that is very difficult to calibrate is the levels of bad credits/non-payments they expect going forward. And maybe they don't quite know themselves. There was a euphemistic paragraph about customers feeling "confusion" in the report which raised an eyebrow. Even if they are very liquid for the forseeable future they may be stress-testing different scenarios (fx, non-payments, political headwind) to see how close they could get to breaking some bond covenants. I don't see that this is a big risk currently, fwiw. But it makes sense to protect the equity from the outside possibility.

Ramos is a terrifically good communicator.

If this ends up relatively benign and they can put the Costa Rica money back into repurchases...