LBTYA - Liberty Global

[dwy000]

Maybe he's doing it for tax reasons? Don't really like capital being deployed there, but at these price levels it's not meaningful for LBYTA.

 

 

https://seekingalpha.com/news/3497964-malone-trims-lions-gate-stake-4_98-percent

 

"The move coincides with Liberty Global (NASDAQ:LBTYA) raising its stake to 4.9%."

 

Hold on. So Malone was selling LGF.A/B while LBTYA was buying LGF.A/B?

 

Fun...

 

Going to 4.9% would suggest he wanted to take it below reporting requirements

[scorpioncapital]

Wow the Germans are really ganging up on Sunrise to prevent the 'Americans' from making 'too much money'. They should have gotten out of Europe long ago. At least out of Schengen. They need to ditch Netherlands, Belgium too. Not sure what will happen with Switzerland. If they can't sell it, wind down? Can they even do that? Global's moves have been at a snail's pace. They need to move much faster and with determination.

[ander]

Does anyone have a view as to the latest of what Freenet wants? or what they other shareholders want? I've read different things in the media. For example, some suggest, they want the deal terms to include LBTYA sharing some risk, others suggest less equity issuance, price concession, etc. No one saying that the deal is a mistake.

 

Wow the Germans are really ganging up on Sunrise to prevent the 'Americans' from making 'too much money'. They should have gotten out of Europe long ago. At least out of Schengen. They need to ditch Netherlands, Belgium too. Not sure what will happen with Switzerland. If they can't sell it, wind down? Can they even do that? Global's moves have been at a snail's pace. They need to move much faster and with determination.

[dwy000]

Does anyone have a view as to the latest of what Freenet wants? or what they other shareholders want? I've read different things in the media. For example, some suggest, they want the deal terms to include LBTYA sharing some risk, others suggest less equity issuance, price concession, etc. No one saying that the deal is a mistake.

 

Wow the Germans are really ganging up on Sunrise to prevent the 'Americans' from making 'too much money'. They should have gotten out of Europe long ago. At least out of Schengen. They need to ditch Netherlands, Belgium too. Not sure what will happen with Switzerland. If they can't sell it, wind down? Can they even do that? Global's moves have been at a snail's pace. They need to move much faster and with determination.

 

I haven't seen any reports suggesting the deal is a mistake or not strategically smart (and for the most part not many are even suggesting it is overpriced).  Freenet's issue seems to stem from the fact that they are not financially able to take their pro rata share of the rights offering.  If they don't go thru with the acquisition they will still owe the break fee which has to really hurt given they literally get nothing for the cash.

[vince]

Does anyone have a view as to the latest of what Freenet wants? or what they other shareholders want? I've read different things in the media. For example, some suggest, they want the deal terms to include LBTYA sharing some risk, others suggest less equity issuance, price concession, etc. No one saying that the deal is a mistake.

 

Wow the Germans are really ganging up on Sunrise to prevent the 'Americans' from making 'too much money'. They should have gotten out of Europe long ago. At least out of Schengen. They need to ditch Netherlands, Belgium too. Not sure what will happen with Switzerland. If they can't sell it, wind down? Can they even do that? Global's moves have been at a snail's pace. They need to move much faster and with determination.

 

I haven't seen any reports suggesting the deal is a mistake or not strategically smart (and for the most part not many are even suggesting it is overpriced).  Freenet's issue seems to stem from the fact that they are not financially able to take their pro rata share of the rights offering.  If they don't go thru with the acquisition they will still owe the break fee which has to really hurt given they literally get nothing for the cash.

 

Anyone care to share what the break up fee is?

[dwy000]

For some reason I thought it was north of $300M.  But looking it up again it looks like its only 50M Swiss.  I guess not that big of a deal (although better than nothing).

[scorpioncapital]

Is the breakup contingent on Sunrise getting financing? Because if not, I can see a case for Liberty suing since nothing has changed except that they changed their mind after making a deal, or wanting a lower price. I don't find this situation particularly good for Global. I mean you have an asset, you want to sell it..and it turns out you can't sell it, or maybe have to reduce the price alot. That cannot be good for valuation. The faster they get rid of businesses in Western Europe (ex UK) the better.

 

 

 

[Foreign Tuffett]

Is the breakup contingent on Sunrise getting financing? Because if not, I can see a case for Liberty suing since nothing has changed except that they changed their mind after making a deal, or wanting a lower price. I don't find this situation particularly good for Global. I mean you have an asset, you want to sell it..and it turns out you can't sell it, or maybe have to reduce the price alot. That cannot be good for valuation. The faster they get rid of businesses in Western Europe (ex UK) the better.

 

Agreed. Liberty Global shareholders should definitely be rooting for this deal to close.

[ander]

Citi double downgrade today. Doesn't sound like anything new, but if someone sees the note curious if the probabilities of Swiss deal closure have changed and if any reason they have.

 

Citi analyst Nayab Amjad double downgraded Liberty Global to Sell from Buy and lowered her price target for the shares to $25 from $31. The stock has outperformed since January on hopes of completion of the Swiss unit disposal, the closing of the Vodafone deal, and the recent tender offer, Amjad tells investors in a research note. However, she has concerns over Liberty Global's longer term growth amid slowing trends at Virgin and harder to find accretive acquisitions. Further, the analyst points out that any further material share buybacks will need to the Swiss sale to complete, and she sees some risks to the deal.

 

 

[cmlber]

the analyst points out that any further material share buybacks will need to the Swiss sale to complete.

 

:o  ex Swiss deal they still have $9B in cash...

[scorpioncapital]

Yeah but they also have a large debt against that cash. So far even with buying back a large chunk of shares this investment has been rather disappointing.

[ander]

Saw the citi report. October 4 is court ruling re Swiss merger. They say it could be blocked and then modifications. They did not assign probabilities to it being blocked. Unless they have an informed view on the court case which they did not express in the report. In which case nothing new.

[WayWardCloud]

Great talk at Communacopia a couple days ago! (the sound quality is awful though)

https://event.webcasts.com/viewer/event.jsp?ei=1260199&tp_key=16cf4675ca

 

Here are my notes

 

Whole company

 

3rd largest MSO (= Multiple Systems Operator = cable co) in the US?? Bigger than Altice and Cox combined. What on Earth is he talking about? (Thanks Ander for the transcript)

"and we’ll see about Switzerland". Mike makes it sound like it might not be happening anymore.

Open to do several more modified dutch tender buybacks. He says he's glad the first one didn’t propel the stock price

 

 

UK/Virgin Media

 

No rush to buy a mobile phone operator.

All network to 1Gig in 24 months

Lightning targeting 400-500k new homes per year, so far has built 1.8M, 400k of which became actual customers. He says the returns are great.

Plans for even more fiber extensions, open to other operators capital and/or government involvement in return for opening their pipes (wholesale) but nothing is certain.

 

 

Holland/Vodafone-Ziggo

 

A decision will be made in January whether to IPO it or not.

Malone and the whole board are flying to Holland for an entire week to discuss the business. Are they about to do something big? Buy the other half from Vodafone?

Revenue and ocf finally very slightly up.

Their sport bundle is so good it's the 2nd reason people subscribe.

36% fix-mobile converged, new box rolling out.

100% of the network at 1 Gig in 24 months versus KPN is only about 40% fiber.

 

 

Belgium/Telenet

 

No growth, great fcf and dividend, very stable and steady, utility-like.

They don't cover the whole country though, super weird because it’s so small. North and South of Belgium are different operators? Looking at inorganic growth there with other regions to finally be complete.

 

 

Switzerland/UPC

 

Regulatory approval due very soon and no issue at all on that front.

30+ day after is an EGM (Extraordinary General Meeting) where the vote will happen, so we're probably talking late November.

He sounds like the deal is probably not happening because of the Germans. Or maybe he's just playing coy to show them he’s not going to run after them for a deal and simply pretends to be OK with keeping UPC because he doesn't want to renegotiate?

Full 1gig coming, new box starting, arpu up 3%, turning the corner... blablabla he sounds full of shit.

 

 

Descaling the whole business?

 

IT costs have shrunk in the past few years, they went from 320M to 200M this year

Still under contract to selling IT services to the divested assets to Vodafone and DT (400M revenues from them next year) then little by little they’ll let go and descale the IT to match the reduced footprint, but it's not an abrupt cliff.

 

Capex is down 25%, OFCF up 75% (?), they spent 2B in the past 3 years on capex so it’s now naturally coming down.

They're not cutting expenses on Lightning new builds or on new boxes roll-out though.

 

"Leverage target of 4-5 as usual, it's around 5 now." He’s changed what they say! The CFO used to say better be at 3-4 if we get smaller.

 

[ander]

WayWardCloud - thx for flagging. I read the transcript (and then listened to the times he spoke about Switzerland). It didn't sound to me that he thought the odds on Switzerland were lower. Just my personal read. Either way, we'll find out soon in enough - as in the coming weeks!

 

"The third thing I'd say is we still are a substantial operating platform. We'd be the third largest MSO in

the U.S., much bigger than Altice, bigger than Cox, might even be bigger than combined. Not sure of

the numbers, off top of my head, but close to it. We'll have in the 7 countries, including Switzerland and

Holland today, over 45 million fixed and mobile RGUs, it's a big business; 7 billion of EBITDA, if you take

half the EBITDA from the JV in Holland. So this is a big platform. And we have a lot of work to do to grow

these businesses, continue to manage these businesses in U.K. and Ireland, Belgium and Holland, Poland

and Slovakia, Switzerland, we'll find out, to realize great value for shareholders. That is the goal. So

there's still a lot of runway, I would say, on the group strategy, and these inflection points don't bother us

at all."

 

[Foreign Tuffett]

Thanks for posting your notes WayWardCloud

[dwy000]

And importantly, he reiterated that 2nd half would be better than first half with a resumption of top line growth and operating cash flow growth.

[skanjete]

WayWardCloud - thx for flagging. I read the transcript (and then listened to the times he spoke about Switzerland). It didn't sound to me that he thought the odds on Switzerland were lower. Just my personal read. Either way, we'll find out soon in enough - as in the coming weeks!

 

"The third thing I'd say is we still are a substantial operating platform. We'd be the third largest MSO in

the U.S., much bigger than Altice, bigger than Cox, might even be bigger than combined. Not sure of

the numbers, off top of my head, but close to it. We'll have in the 7 countries, including Switzerland and

Holland today, over 45 million fixed and mobile RGUs, it's a big business; 7 billion of EBITDA, if you take

half the EBITDA from the JV in Holland. So this is a big platform. And we have a lot of work to do to grow

these businesses, continue to manage these businesses in U.K. and Ireland, Belgium and Holland, Poland

and Slovakia, Switzerland, we'll find out, to realize great value for shareholders. That is the goal. So

there's still a lot of runway, I would say, on the group strategy, and these inflection points don't bother us

at all."

 

Hi Ander,

Where could I find the transcript?

I have some trouble understanding the sound of the presentation.

 

Thanks,

 

 

[ander]

I got a hard copy from a friend. I'm guessing Bloomberg, Thomson Reuters, or CapIQ probably have it. I didn't see it on SeekingAlpha.

[vince]

The first paragraph is from Waywords earlier post followed by my opinion

 

Regulatory approval due very soon and no issue at all on that front.

30+ day after is an EGM (Extraordinary General Meeting) where the vote will happen, so we're probably talking late November.

He sounds like the deal is probably not happening because of the Germans. Or maybe he's just playing coy to show them he’s not going to run after them for a deal and simply pretends to be OK with keeping UPC because he doesn't want to renegotiate?

Full 1gig coming, new box starting, arpu up 3%, turning the corner... blablabla he sounds full of shit.

 

Your last few words are right on.  I have owned the stock for 5 years.  I was definitely wrong in my assessment of their earnings growth 5 years out so I don't deserve a good return here but the current valuation is preposterous.  The company has grown operating cash flow I think every quarter, year over year for more than the 5 years I have held it.  In addition they have bought back a ton of stock.  And I realize that cable valuations are low across the board over there but even Fries himself commented on the fact that if investors put same valuation on Liberty as Telenet, then the stock would be 40 bucks.  And he sounds surprised by that!!! I wish someone would just be straight with him and tell him that the reason the valuation isnt in line with peers is because NOBODY FUCKING BELIEVES A WORD HE SAYS BECAUSE HE IS FULL OF SHIT.  Everyone can see that when he's talking about a challenged country that what he's saying doesn't even come close to reality.  DOES HE NEED ANOTHER 20 MILLION ANNUALLY TO UNDERSTAND THAT?

[Foreign Tuffett]

The first paragraph is from Waywords earlier post followed by my opinion

 

Regulatory approval due very soon and no issue at all on that front.

30+ day after is an EGM (Extraordinary General Meeting) where the vote will happen, so we're probably talking late November.

He sounds like the deal is probably not happening because of the Germans. Or maybe he's just playing coy to show them he’s not going to run after them for a deal and simply pretends to be OK with keeping UPC because he doesn't want to renegotiate?

Full 1gig coming, new box starting, arpu up 3%, turning the corner... blablabla he sounds full of shit.

 

Your last few words are right on.  I have owned the stock for 5 years.  I was definitely wrong in my assessment of their earnings growth 5 years out so I don't deserve a good return here but the current valuation is preposterous.  The company has grown operating cash flow I think every quarter, year over year for more than the 5 years I have held it.  In addition they have bought back a ton of stock.  And I realize that cable valuations are low across the board over there but even Fries himself commented on the fact that if investors put same valuation on Liberty as Telenet, then the stock would be 40 bucks.  And he sounds surprised by that!!! I wish someone would just be straight with him and tell him that the reason the valuation isnt in line with peers is because NOBODY FUCKING BELIEVES A WORD HE SAYS BECAUSE HE IS FULL OF SHIT.  Everyone can see that when he's talking about a challenged country that what he's saying doesn't even come close to reality.  DOES HE NEED ANOTHER 20 MILLION ANNUALLY TO UNDERSTAND THAT?

 

I agree that investors are tired of Fries' relentless optimism, particularly now that the Switzerland deal looks imperiled. Years of under performance and Fries has been head cheerleader the entire time.

[Munger_Disciple]

I agree with vince & Foreign Tuffett. The problem with Liberty Global is Mike Fries. He has never been straight with shareholders about the problems faced by the company. He has always been permanently bullish and I don't see any signs that he has changed. So his comments are basically worthless.

 

I remember how Fries used to brag about the superiority of his video business compared to US operators' video biz because his content costs were lower. But he never mentioned that basic content package is crap in Europe and if want anything good you have to pay up for it. Similarly he never mentioned all the competitive and regulatory threats to broadband business in Europe and how unattractive it is relative to US cable position in broadband. He also did not realize early on that you need both mobile and fixed broadband in big European markets to succeed.

[WayWardCloud]

Incidentally, if you stalk him down on Instagram (like the creep I am) you'll find out he got married to a much younger woman named Michelle Malone (!).

It happened during the summer of 2015 which coincides exactly with the height of the stock  ::) ;D

 

 

 

 

 

 

 

(their dogs are cute though)

[walkie518]

Incidentally, if you stalk him down on Instagram (like the creep I am) you'll find out he got married to a much younger woman named Michelle Malone (!).

It happened during the summer of 2015 which coincide exactly with the height of the stock  ::) ;D

 

 

unfortunately, this explains everything

 

 

 

 

 

 

(their dogs are cute though)

[Foreign Tuffett]

Incidentally, if you stalk him down on Instagram (like the creep I am) you'll find out he got married to a much younger woman named Michelle Malone (!).

It happened during the summer of 2015 which coincide exactly with the height of the stock  ::) ;D

 

 

 

 

(their dogs are cute though)

 

Yeah, I've seen that too. No relation to John Malone, although perhaps there's some sort of Freudian thing going on.

 

Either way, she really ought to make her Instagram private as the picture of the new house in Florida and countless pictures of dogs on private jets reinforce the idea that Fries is out of touch with the day-to-day operations of LBTYK's businesses.

 

Fries should take a page from Sam Walton's playbook. Walton used to travel constantly between stores to learn/disseminate best practices and motivate employees.

 

 

 

[Jurgis]

Fries should take a page from Sam Walton's playbook. Walton used to travel constantly between stores to learn/disseminate best practices and motivate employees.

 

Well, he is travelling with dogs on private jets, which should disseminate best practices and motivate employees, amirite?  8)