Spekulatius Posted February 16, 2020 Share Posted February 16, 2020 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. Link to comment Share on other sites More sharing options...
ABM Posted February 16, 2020 Share Posted February 16, 2020 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. Link to comment Share on other sites More sharing options...
scorpioncapital Posted February 17, 2020 Share Posted February 17, 2020 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. Link to comment Share on other sites More sharing options...
sundin Posted March 9, 2020 Share Posted March 9, 2020 @ $ 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. Link to comment Share on other sites More sharing options...
Foreign Tuffett Posted March 9, 2020 Share Posted March 9, 2020 @ $ 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. Link to comment Share on other sites More sharing options...
scorpioncapital Posted March 9, 2020 Share Posted March 9, 2020 Countless companies are also cheap if you ignore expenses ) Link to comment Share on other sites More sharing options...
sundin Posted March 9, 2020 Share Posted March 9, 2020 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. Link to comment Share on other sites More sharing options...
dwy000 Posted March 10, 2020 Share Posted March 10, 2020 @ $ 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. Link to comment Share on other sites More sharing options...
scorpioncapital Posted March 10, 2020 Share Posted March 10, 2020 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. Link to comment Share on other sites More sharing options...
thefatbaboon Posted March 10, 2020 Share Posted March 10, 2020 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. Link to comment Share on other sites More sharing options...
changegonnacome Posted March 22, 2020 Share Posted March 22, 2020 High speed broadband product is turning out to be a hugely important product for households in Liberty's markets in the current environment. Presume households on copper might be looking enviously at neighbors with 300 mb/s via Vrigins fibre/cable network. Any thoughts on Liberty now in light of price fall to $10bn...........new UK budget with broadband investment planned for areas that Virgin wouldn't have been that interested in any way? Link to comment Share on other sites More sharing options...
dwy000 Posted May 1, 2020 Share Posted May 1, 2020 Big move today (finally). Interesting move if it's real. Could be a really competitive player and reduce costs for Virgin. https://finance.yahoo.com/news/telefonica-liberty-said-weigh-combining-154536260.html Link to comment Share on other sites More sharing options...
ander Posted May 1, 2020 Share Posted May 1, 2020 Big move today (finally). Interesting move if it's real. Could be a really competitive player and reduce costs for Virgin. https://finance.yahoo.com/news/telefonica-liberty-said-weigh-combining-154536260.html agree. could be interesting. of course depends on the structure. and I believe LBTYK in a position of strength relative to TEF. any thoughts on any potential regulatory / antitrust hurdles? Link to comment Share on other sites More sharing options...
vince Posted May 1, 2020 Share Posted May 1, 2020 Big move today (finally). Interesting move if it's real. Could be a really competitive player and reduce costs for Virgin. https://finance.yahoo.com/news/telefonica-liberty-said-weigh-combining-154536260.html agree. could be interesting. of course depends on the structure. and I believe LBTYK in a position of strength relative to TEF. any thoughts on any potential regulatory / antitrust hurdles? Dont know what to make of it but the Lbtyb's are trading at 33 and actually touched 55 at one point late in the day. Anyone? Link to comment Share on other sites More sharing options...
scorpioncapital Posted May 1, 2020 Share Posted May 1, 2020 Same thing was seen with liberty TripAdvisor b, and even discovery b. Bs are not marginable, hard to short , low liquidity. Some have suggested a short seller was caught in all 3 of them. But it's fascinating to see the same dynamic in all three b shares . Link to comment Share on other sites More sharing options...
dwy000 Posted May 2, 2020 Share Posted May 2, 2020 Big move today (finally). Interesting move if it's real. Could be a really competitive player and reduce costs for Virgin. https://finance.yahoo.com/news/telefonica-liberty-said-weigh-combining-154536260.html agree. could be interesting. of course depends on the structure. and I believe LBTYK in a position of strength relative to TEF. any thoughts on any potential regulatory / antitrust hurdles? There will always be hurdles but it's hard to see any antitrust here. Virgin has fiber but no spectrum/wireless network. O3 has a wireless network. It's very complimentary but doesn't remove a competitor in the market (except Virgin as an MVNO). Link to comment Share on other sites More sharing options...
skanjete Posted May 2, 2020 Share Posted May 2, 2020 This is out of their fixed-mobile convergence playbook. This worked beautifully in Belgium and the Netherlands with a lot of synergies and less churn. It would be a very nice deal (depending on terms) if it comes to fruition. Link to comment Share on other sites More sharing options...
scorpioncapital Posted May 2, 2020 Share Posted May 2, 2020 I believe o2 oibda minus capex for 2019 was 1.2 billion euro. not sure exactly the difference between ebitda and oibda. Seems the same? https://www.telefonica.com/documents/162467/145168336/rdos19t4-eng.pdf/74c6d30c-f0ca-964f-e444-aff5b049727f The question will be the deal specifics about the price paid. Link to comment Share on other sites More sharing options...
minten Posted May 2, 2020 Share Posted May 2, 2020 Same thing was seen with liberty TripAdvisor b, and even discovery b. Bs are not marginable, hard to short , low liquidity. Some have suggested a short seller was caught in all 3 of them. But it's fascinating to see the same dynamic in all three b shares . Haven't checked Liberty, but those other two have virtually no short interest. Just manipulating of small floats imo. Link to comment Share on other sites More sharing options...
Liberty Posted May 2, 2020 Author Share Posted May 2, 2020 https://www.nytimes.com/reuters/2020/05/02/world/europe/02reuters-millicom-telefonica-deal.html Link to comment Share on other sites More sharing options...
skanjete Posted May 7, 2020 Share Posted May 7, 2020 Some positive news the last few days. I like the deal. Although it strikes me they valued Virgin Media only about 20% more valuable in £'s than when they bought it and about the same in $'s. I didn't check yet whether they upstreamed meaningful capital to the holding in the intermediate years. Does anyone here have these data readily available? I suppose their free cash flow will be meaningfully enhanced by the deal. Also, they did a nice buy back : 29million shares (almost m500$) at the bottom prices of mid march. But the results report again wasn't intellectually honest : stressing some rare positive data points while ignoring the meaningful figures which were more negative than positive. Link to comment Share on other sites More sharing options...
scorpioncapital Posted May 7, 2020 Share Posted May 7, 2020 It really is starting to look as if Global is divesting of more and more. Maybe everything eventually. Netherlands vodafone deal is 50-50. Now virgin-o2 is 50-50. This is definitely de-risking their participation and also increasing cash and lowering debt. Everytime Malone vehicle has started selling and raising cash, a few years later you had a new deal, possibly in a totally new field. We shall see... PS. the telefonica slides have more detailed info - https://seekingalpha.com/article/4343986-telefonica-s-2020-q1-results-earnings-call-presentation Link to comment Share on other sites More sharing options...
Value92 Posted May 7, 2020 Share Posted May 7, 2020 Losing subs in every market and high leverage. No bueno... Link to comment Share on other sites More sharing options...
bizaro86 Posted May 7, 2020 Share Posted May 7, 2020 I would say they are a net buyer of assets in the UK deal though. They are sending cash to Telefonica at closing. Link to comment Share on other sites More sharing options...
scorpioncapital Posted May 7, 2020 Share Posted May 7, 2020 I understand that they are getting net back 1.5 billion gbp after accounting for the 2.5 b to telefonica. I'm assuming they are getting back somehow 4 billion. I see it as a bit of a divestiture - but of a much larger operation. 50% of virgin + o2 instead of 100% of virgin. Imagining in time the balance sheet will look like liberty media. A line item for each 'equity investment'. So they can sell each one and just looks like you and I selling a stock from the portfolio Link to comment Share on other sites More sharing options...
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