Shooter MacGavin Posted March 23, 2018 Share Posted March 23, 2018 How do people on this board attribute capex to growth investment vs. maintenance for this LBTYA and other cable/broadband providers? To me it seems like upgrades to existing networks would be treated differently than new builds and both of these different from on-site customer hardware/equipment. Another way to look at it would be comparing SAC to lifetime value of customers, but it seems difficult to get a fix on these numbers. Is anyone on the board aware of any cable providers that break this information out in detail either in SEC documents or conference calls? Based on what they've said, 20% of revenue in capex is roughly run-rate depreciation for LBTYA. I guess you could get more granular because they do break it out, but I'm not sure it would add much to an analysis. From memory, Comcast's cable biz is around 11-12% of revenue and Charter is around 13-14% for run rate capex. They also break it out similarly. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 23, 2018 Share Posted March 23, 2018 Seems to me that CMCSA at 8x EBITDA is a far better bet than LBTYA right now. I am surprised how far CMCSA has fallen, due to increased interest rates and maybe the SKY acquisition. However, CMCSA are excellent operators, while LBTYA seem to fumble around. I know where I will put my money. Link to comment Share on other sites More sharing options...
Shooter MacGavin Posted March 23, 2018 Share Posted March 23, 2018 Seems to me that CMCSA at 8x EBITDA is a far better bet than LBTYA right now. I am surprised how far CMCSA has fallen, due to increased interest rates and maybe the SKY acquisition. However, CMCSA are excellent operators, while LBTYA seem to fumble around. I know where I will put my money. Hey Spekulatius, I'm asking as someone who doesn't follow Comcast super closely except for the cable business. What do you think the upside for Comcast is from here, like 3-4 years out? is it a mid to high teens returns annual compounder? low to mid twenties? more? I see that they lever less than the liberties and pay out dividends. You've peaked my interest. Link to comment Share on other sites More sharing options...
vince Posted March 23, 2018 Share Posted March 23, 2018 Hey Spekulatius, they do have programming assets that one could argue are not worth same multiple. Having said that I like them at these prices and have been debating whether I want to spend the effort to have a deep look. Link to comment Share on other sites More sharing options...
Jurgis Posted March 23, 2018 Share Posted March 23, 2018 If John Malone died tomorrow, I'd sell all my Liberties and likely buy some Comcast at least. But then I'm a jockey investor, so ./shrug 8) Link to comment Share on other sites More sharing options...
Spekulatius Posted March 24, 2018 Share Posted March 24, 2018 Hey Spekulatius, they do have programming assets that one could argue are not worth same multiple. Having said that I like them at these prices and have been debating whether I want to spend the effort to have a deep look. I bought some today. I think the valuation looks more than fair, which is quite in this market. I have been watching them since about 2010,but never bought shares. They are good operators and now how to make acquisitions work. I think they will make SKY work too. They bought NBC from those morons at GE for cheap and turned it around and it’s doing quite well. I think Comcast is suitable even for jockey investors, but their playbook is different then Malone’s -less leverage, less deal dependent and just focused to generate the max out of the business with what looks to be a long term view. I like it. Link to comment Share on other sites More sharing options...
Liberty Posted March 26, 2018 Author Share Posted March 26, 2018 https://www.totaltele.com/view.aspx?ID=499718 Liberty Global scraps $876m bid for Multimedia Polska Link to comment Share on other sites More sharing options...
WayWardCloud Posted April 23, 2018 Share Posted April 23, 2018 https://www.ft.com/content/28a1f082-3738-11e8-8eee-e06bde01c544 More rumors about an imminent Vodafone deal ::) According to the article, the regulator is the big question mark here. Fingers crossed! Link to comment Share on other sites More sharing options...
Liberty Posted April 23, 2018 Author Share Posted April 23, 2018 There's been rumors on and off for so long, when (if) it actually happens I'm not sure I'll believe it at first... Link to comment Share on other sites More sharing options...
WayWardCloud Posted April 24, 2018 Share Posted April 24, 2018 I'm wondering if the sell of UPC Austria to DT in December could have been a super clever Malone bait to clear out the way for the coming Vodafone transaction. The deal was much smaller of course but it can be used to argue to the EU regulator that DT themselves didn't have a problem with consolidating a cable + mobile market when it was in their interest. Link to comment Share on other sites More sharing options...
Liberty Posted May 7, 2018 Author Share Posted May 7, 2018 Again: https://www.reuters.com/article/us-liberty-global-m-a-vodafone/vodafone-closes-in-on-game-changing-liberty-global-deal-idUSKBN1I41PE Link to comment Share on other sites More sharing options...
Liberty Posted May 8, 2018 Author Share Posted May 8, 2018 Finally? https://seekingalpha.com/news/3353843-ft-vodafone-closing-18b-asset-deal-liberty-global After long flirtations, Vodafone (VOD -1.4%) is finally closing in on a game-changing European asset deal with John Malone's Liberty Global (LBTYA -2.8%) that could come tonight, the Financial Times reports. A finalized €18B deal for Vodafone to buy German and eastern European assets from Liberty might come with Liberty's earnings tonight, though the transaction could slip a few days, according to the report. Getting hold of cableco Unitymedia in Germany would give Vodafone a better competitive interface with Deutsche Telekom Link to comment Share on other sites More sharing options...
rogermunibond Posted May 8, 2018 Share Posted May 8, 2018 Guesses on where Malone redeploys this capital? I'm hoping it's not coming back to shareholders in the form of capital return. Link to comment Share on other sites More sharing options...
SI Posted May 8, 2018 Share Posted May 8, 2018 Mike is on record saying they aren't selling a high multiple biz to buy a high mult biz - my guess is ITV. Link to comment Share on other sites More sharing options...
rogermunibond Posted May 8, 2018 Share Posted May 8, 2018 So besides doubling down on UK business, any cable assets ex-Europe that are cheap? Besides LatAm. Millicom or Megacable maybe but that would just be weird after spinning off LILA. Would Malone/Fries look at ATUS and then combine Liberty with CHTR? Africa, Asia, ME are just not good cable markets. Link to comment Share on other sites More sharing options...
dwy000 Posted May 8, 2018 Share Posted May 8, 2018 Mediacom is up for sale. Nice tuck in for Charter. Link to comment Share on other sites More sharing options...
Liberty Posted May 9, 2018 Author Share Posted May 9, 2018 Here we go: https://www.wsj.com/articles/vodafone-confirms-deal-to-buy-some-of-liberty-globals-european-assets-for-nearly-23-billion-1525845601 Presentation: http://www.libertyglobal.com/pdf/presentations/Liberty-Global-Q1-2018-Earnings-Presentation.pdf Link to comment Share on other sites More sharing options...
AJDelphi Posted May 10, 2018 Share Posted May 10, 2018 So they sold Austria at 11x EV to OCF and Germany, Hungary, Romania, Czech Republic to Vodafone for 11.5x. Looks pretty straighforward what they value the business at. When they bought Virgin Media in 2013 it was at 8.8x OCF. With the 10 billion in cash I'd be totally fine with them buying back the stock heavily with the shares around $30. Could make a large acquisition too though. Maybe Telecom Italia. Link to comment Share on other sites More sharing options...
dwy000 Posted May 10, 2018 Share Posted May 10, 2018 I haven't looked thru the whole presentation but did they mention tax impact of the sale? I have to assume there's gains there that will dissipate net cash available for redeployment. Of course Malone rarely makes a move without having the tax aspect covered off favorably. Link to comment Share on other sites More sharing options...
colinwalt Posted May 10, 2018 Share Posted May 10, 2018 From the call transcript: After debt and working capital adjustments, total net cash proceeds from the transaction are expected to be EUR10.6 billion or around $13 billion and that assumes we deliver the CE assets debt free and Vodafone assumes the debt in Germany. On top of that, we will keep all the cash generated by these businesses between now and closing, however long that takes and we know at the top of everyone's mind is use of proceeds. I get that, but given that this transaction will take between 12 and 15 months to close, we're not going to start spending money that isn't ours. So the EUR10.6 billion or the $13 billion is kind of how this transaction was built up. So, there's been some dueling enterprise values out there and I try to indicate in my remarks, as we get that, but if you believe that 10.6 billion or EUR10.8 billion that we and both Vodafone reported, that is the cash proceeds figure after all debt is accounted for, Jeff, and all taxes and I'll tell you that at this point, we view -- we think there will be no cash taxes owed on this transaction. We get to that EUR19 billion by simply adding as GAAP accounting requires us to do, the various liabilities in the transaction and that is EUR19 billion. So everybody's got their approach to it. That's fine. The main figure here is we agree on the net proceeds, so you can build up the enterprise value as you choose, we did it on a GAAP basis and that's how we got to 19, which is 11.5 times 2017 operating cash flow. But the EUR10.6 billion figure is after all debt is either assumed in Germany and therefore reduced from the 19 or already repaid we're delivering to Eastern European assets debt free, so that is the number. I’ll repeat what I said in the remarks, the deal won't be done for over a year. So if you can tell us where stocks and interest rates and market multiples will be 12, 15 months from now, I'll tell you what we'll do with the capital, but I can assure you we have no deals in the queue that require any capital, so there's nothing for us to announce. There's no big transactions spending. There's nothing we even have our eye on that would require capital. And I think as you know and I have already indicated, buybacks are a big part of what we do. We've already bought back half this company in the last ten years and at today's price, where it is right now, if this is where the stock was in a year, we'd probably use every penny of it to buy the stock back. Link to comment Share on other sites More sharing options...
undervalued Posted May 10, 2018 Share Posted May 10, 2018 From the call transcript: After debt and working capital adjustments, total net cash proceeds from the transaction are expected to be EUR10.6 billion or around $13 billion and that assumes we deliver the CE assets debt free and Vodafone assumes the debt in Germany. On top of that, we will keep all the cash generated by these businesses between now and closing, however long that takes and we know at the top of everyone's mind is use of proceeds. I get that, but given that this transaction will take between 12 and 15 months to close, we're not going to start spending money that isn't ours. So the EUR10.6 billion or the $13 billion is kind of how this transaction was built up. So, there's been some dueling enterprise values out there and I try to indicate in my remarks, as we get that, but if you believe that 10.6 billion or EUR10.8 billion that we and both Vodafone reported, that is the cash proceeds figure after all debt is accounted for, Jeff, and all taxes and I'll tell you that at this point, we view -- we think there will be no cash taxes owed on this transaction. We get to that EUR19 billion by simply adding as GAAP accounting requires us to do, the various liabilities in the transaction and that is EUR19 billion. So everybody's got their approach to it. That's fine. The main figure here is we agree on the net proceeds, so you can build up the enterprise value as you choose, we did it on a GAAP basis and that's how we got to 19, which is 11.5 times 2017 operating cash flow. But the EUR10.6 billion figure is after all debt is either assumed in Germany and therefore reduced from the 19 or already repaid we're delivering to Eastern European assets debt free, so that is the number. I’ll repeat what I said in the remarks, the deal won't be done for over a year. So if you can tell us where stocks and interest rates and market multiples will be 12, 15 months from now, I'll tell you what we'll do with the capital, but I can assure you we have no deals in the queue that require any capital, so there's nothing for us to announce. There's no big transactions spending. There's nothing we even have our eye on that would require capital. And I think as you know and I have already indicated, buybacks are a big part of what we do. We've already bought back half this company in the last ten years and at today's price, where it is right now, if this is where the stock was in a year, we'd probably use every penny of it to buy the stock back. For the past 5 years, the stock has gone no where. It actually declined 18% if you want to be exact, per google finance. It looks like Europe is just not a good environment for Cable compare to the US (Charter). Anyone else has a good explanation on why the stock hasn't gone anywhere? Is this going to be like MSFT stagnant years, where all metrics looks good but share price doesn't go anywhere? Link to comment Share on other sites More sharing options...
Jurgis Posted May 10, 2018 Share Posted May 10, 2018 Thanks colinwalt for the excerpts. I guess the 1 year delay is part of the reason stock went down. Investors don't want to wait 1 year for ca$h. Plus the whole company sale is off the table. Link to comment Share on other sites More sharing options...
WayWardCloud Posted May 10, 2018 Share Posted May 10, 2018 Maybe they could buy O2 UK from Telefonica? Fries seems really convinced about fixed/mobile convergence. I think the stock price reflects - overall distrust in management (hides problems, super promotional, missed guidance) - deal uncertainty and length (EU regulator) - they're scaling down which is the opposite of what they've been saying is key to their business model all along. - they're selling the crown jewel (Germany) which was their highest growing asset and if you ask me the better run country in Europe - they've announced troubles ahead in Switzerland (and even tried to exit that market all together... before actually doubling down. that's reassuring.) - now they're saying they are having troubles in Belgium - Ziggo is still undisclosed but was bleeding left and right last time we were allowed to check - I imagine that once you start displaying this pattern of exiting when things just get too hard it might encourage the incumbents to compete very hard and be irrational for a few years just to get Liberty out of their country. ... Seems to me like they're cornered and retreating back into the most "American" of the European markets, the UK. I wonder if political beliefs might be influencing Malone as well here. He's always been a very rational dealmaker in the past but knowing that he listens to Fox News and supports Trump makes me wonder just how much fake crap is in his head (imaginary no go zones, islamophobia, fear of "socialism"...). All that said I think the price they've gotten from Vodafone is really good (makes me wonder what they were asking for in 2015) and it proves that the value of their assets on the private market is significantly higher than what the stock price reflects. An organized retreat at high prices might just be the best thing to do for shareholders. Now the million dollar question is to calculate the value of New Liberty Global "ex Vodafone". If we assumed the deal happens, how much are we paying for the rest of the company in terms of EV/EBITDA? Link to comment Share on other sites More sharing options...
smathew Posted May 10, 2018 Share Posted May 10, 2018 "he listens to Fox News" Don't forget that he was a co-founder . Link to comment Share on other sites More sharing options...
WayWardCloud Posted May 10, 2018 Share Posted May 10, 2018 Yep. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now