Liberty Posted February 18, 2015 Author Share Posted February 18, 2015 So what are the attractions of LiLAC as a rollup vehicle? Would they acquire cable assets in new countries and just operate them better/efficiently? IMO their advantage in rolling up the region would be that as a tracker, they would benefit from Global's balance sheet and scale. …and thereby using LiLAC shares as an acquisition currency. I couldn't come up with any other rationale for the LiLAC tracking stock. Probably some of that, but their cost of debt would also be much lower because of Global. Link to comment Share on other sites More sharing options...
merkhet Posted February 18, 2015 Share Posted February 18, 2015 So what are the attractions of LiLAC as a rollup vehicle? Would they acquire cable assets in new countries and just operate them better/efficiently? IMO their advantage in rolling up the region would be that as a tracker, they would benefit from Global's balance sheet and scale. …and thereby using LiLAC shares as an acquisition currency. I couldn't come up with any other rationale for the LiLAC tracking stock. Probably some of that, but their cost of debt would also be much lower because of Global. I think Maffei mentioned in an interview that they figure LiLAC will be a faster grower while Europe will not. Link to comment Share on other sites More sharing options...
Liberty Posted February 18, 2015 Author Share Posted February 18, 2015 I think Maffei mentioned in an interview that they figure LiLAC will be a faster grower while Europe will not. I don't remember the exact quote, but I think he said that they had very different risk profiles, and that since LILAC was so much smaller than the European operations, inside Global it wasn't moving the needle, but on its own, it might be something that some people looking for that different profile might want to invest in directly. That's how I understood it, anyway. It's a bit like splitting QVC from the small Liberty Interactive e-commerce businesses (though obviously that's not a perfect analogy). Link to comment Share on other sites More sharing options...
ni-co Posted February 18, 2015 Share Posted February 18, 2015 I think Maffei mentioned in an interview that they figure LiLAC will be a faster grower while Europe will not. I don't remember the exact quote, but I think he said that they had very different risk profiles, and that since LILAC was so much smaller than the European operations, inside Global it wasn't moving the needle, but on its own, it might be something that some people looking for that different profile might want to invest in directly. That's how I understood it, anyway. It's a bit like splitting QVC from the small Liberty Interactive e-commerce businesses (though obviously that's not a perfect analogy). Yes, I've heard him say this, too, but I don't buy it as the main reasoning behind this tracker. This would make sense if LiLAC were significantly larger but with a size that small you could also make the point that this tracking stock doesn't move the needle for existing shareholders, so why doing it at all? Link to comment Share on other sites More sharing options...
rpadebet Posted February 18, 2015 Share Posted February 18, 2015 As I had previously mentioned, the rationale behind a tracking stock as opposed to a spin off is you get a transaction currency in the tracker and you can retain the balance sheet benefit of a larger combined company. In of the interviews/talks of Malone or in one of the books he mentions this. I forget exactly where. I think he mentions you need a benevolent dictator at the top of both these companies for such an arrangement to work! I think LILA could be TCI 3.0 (Latam roll up). Very interesting tracker characteristics as well. Its small enough to cause institutions to dispose it off. Others who bet on Malone's methods can accumulate and benefit. Link to comment Share on other sites More sharing options...
jay21 Posted February 18, 2015 Share Posted February 18, 2015 As I had previously mentioned, the rationale behind a tracking stock as opposed to a spin off is you get a transaction currency in the tracker and you can retain the balance sheet benefit of a larger combined company. In of the interviews/talks of Malone or in one of the books he mentions this. I forget exactly where. I think he mentions you need a benevolent dictator at the top of both these companies for such an arrangement to work! I think LILA could be TCI 3.0 (Latam roll up). Very interesting tracker characteristics as well. Its small enough to cause institutions to dispose it off. Others who bet on Malone's methods can accumulate and benefit. I know he mentioned that if you have a growing unprofitable business, it is more valuable in a larger profitable company because the tax deductions are immediate instead of being deferred as NOLs. Link to comment Share on other sites More sharing options...
rpadebet Posted February 18, 2015 Share Posted February 18, 2015 As I had previously mentioned, the rationale behind a tracking stock as opposed to a spin off is you get a transaction currency in the tracker and you can retain the balance sheet benefit of a larger combined company. In of the interviews/talks of Malone or in one of the books he mentions this. I forget exactly where. I think he mentions you need a benevolent dictator at the top of both these companies for such an arrangement to work! I think LILA could be TCI 3.0 (Latam roll up). Very interesting tracker characteristics as well. Its small enough to cause institutions to dispose it off. Others who bet on Malone's methods can accumulate and benefit. I know he mentioned that if you have a growing unprofitable business, it is more valuable in a larger profitable company because the tax deductions are immediate instead of being deferred as NOLs. There you go, that's another benefit. Taxes are always part of every rationale with Malone companies. I wish more operators were like this. Link to comment Share on other sites More sharing options...
Liberty Posted February 18, 2015 Author Share Posted February 18, 2015 Yes, I've heard him say this, too, but I don't buy it as the main reasoning behind this tracker. This would make sense if LiLAC were significantly larger but with a size that small you could also make the point that this tracking stock doesn't move the needle for existing shareholders, so why doing it at all? Because a shareholder who likes it can buy more of it, thus making it big enough in their portfolio to move the needle, unlike when it was inside of LBTYA. I think the reasons are multiple: Having a stock currency, better targeting buybacks only at European operations, sharing the balance sheet yet allowing shareholders to concentrate more in one or the other, etc. Link to comment Share on other sites More sharing options...
ni-co Posted February 18, 2015 Share Posted February 18, 2015 Yes, I've heard him say this, too, but I don't buy it as the main reasoning behind this tracker. This would make sense if LiLAC were significantly larger but with a size that small you could also make the point that this tracking stock doesn't move the needle for existing shareholders, so why doing it at all? Because a shareholder who likes it can buy more of it, thus making it big enough in their portfolio to move the needle, unlike when it was inside of LBTYA. I think the reasons are multiple: Having a stock currency, better targeting buybacks only at European operations, sharing the balance sheet yet allowing shareholders to concentrate more in one or the other, etc. Thanks, I forgot the buyback aspect of it. Your other reason would also imply that you'd have to become very interested in it. This is Malone basically saying: I'd think about buying a little bit more or this. He wouldn't do it for the people who "don't want" LatAm exposure when this exposure has only been 5% of LBTYA and they have the risk exposure via the shared balance sheet none the less. As I had previously mentioned, the rationale behind a tracking stock as opposed to a spin off is you get a transaction currency in the tracker and you can retain the balance sheet benefit of a larger combined company. In of the interviews/talks of Malone or in one of the books he mentions this. I forget exactly where. I think he mentions you need a benevolent dictator at the top of both these companies for such an arrangement to work! I think LILA could be TCI 3.0 (Latam roll up). Very interesting tracker characteristics as well. Its small enough to cause institutions to dispose it off. Others who bet on Malone's methods can accumulate and benefit. I know he mentioned that if you have a growing unprofitable business, it is more valuable in a larger profitable company because the tax deductions are immediate instead of being deferred as NOLs. There you go, that's another benefit. Taxes are always part of every rationale with Malone companies. I wish more operators were like this. Yes, but taxes and the shared balance sheet are only the reasons for a tracker and against a complete spin-off. This doesn't explain why he doesn't keep everything like it is. It has to be like rpadebet and Liberty just explained. So thanks, guys! Link to comment Share on other sites More sharing options...
Munger_Disciple Posted February 18, 2015 Share Posted February 18, 2015 I think another advantage of LiLAC is that it can eventually be reorganized as a separate entity and merged with a US cable co (example Charter). This will result in operational efficiencies due to lower content costs. I think Malone once said that their Puerto Rican cable co can save save $40-50M annually in content costs if they were to be a part of a larger US cable co. Link to comment Share on other sites More sharing options...
rpadebet Posted February 18, 2015 Share Posted February 18, 2015 I think another advantage of LiLAC is that it can eventually be reorganized as a separate entity and merged with a US cable co (example Charter). This will result in operational efficiencies due to lower content costs. I think Malone once said that their Puerto Rican cable co can save save $40-50M annually in content costs if they were to be a part of a larger US cable co. Actually if he just wanted to sell PR Cable, I think he would just do that. The only reason he would want to go through this trouble of a tracker is if he is planning another roll up. Latam cable is fragmented. Lots of small operators. I think the playbook fits perfectly yet again here. Link to comment Share on other sites More sharing options...
Munger_Disciple Posted February 18, 2015 Share Posted February 18, 2015 I said "eventually". I meant he could merge it with a US entity after the roll-up game is played out in Latam. Link to comment Share on other sites More sharing options...
rogermunibond Posted February 18, 2015 Share Posted February 18, 2015 I think another advantage of LiLAC is that it can eventually be reorganized as a separate entity and merged with a US cable co (example Charter). This will result in operational efficiencies due to lower content costs. I think Malone once said that their Puerto Rican cable co can save save $40-50M annually in content costs if they were to be a part of a larger US cable co. Actually if he just wanted to sell PR Cable, I think he would just do that. The only reason he would want to go through this trouble of a tracker is if he is planning another roll up. Latam cable is fragmented. Lots of small operators. I think the playbook fits perfectly yet again here. Thanks all for a stimulating discussion! Stumbled upon this website that has a listing of cable and DBS operations by country in Latam. So now it seems that compared to cable, DBS enjoys a cost advantage on the pay TV side but once you are talking about broadband, then it's a whole other game. Are there any studies about how Latam consumers generally access the Internet? Are they like many in Asia heavily mobile 3G/4G skewed in terms of data? If so, what's the argument that a double play (TV/broadband) or a triple (TV/broadband/phone) will make any in roads in the region? http://www.zonalatina.com/CableOps.htm Link to comment Share on other sites More sharing options...
ni-co Posted March 3, 2015 Share Posted March 3, 2015 Btw if you want to take a look at a hot candidate for LBTYA's next acquisition target, take a look at Tele Columbus (TC1). For the interested: I've written up my investment thesis for TC1 in a very short way: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/tele-columbus-tc1/ Link to comment Share on other sites More sharing options...
kab60 Posted April 20, 2015 Share Posted April 20, 2015 Liberty Global’s Subsidiary Telenet to Acquire BASE for 1.3b euro: http://www.libertyglobal.com/pdf/press-release/Liberty-Global-BASE-Acquisition-FINAL.pdf Link to comment Share on other sites More sharing options...
Liberty Posted April 20, 2015 Author Share Posted April 20, 2015 Price post-synergies seems good. Probably main benefit will come from quad play reducing churn on the cable business. Link to comment Share on other sites More sharing options...
Liberty Posted April 21, 2015 Author Share Posted April 21, 2015 http://www.wsj.com/articles/belgium-could-signal-libertys-change-of-heart-1429544989 Link to comment Share on other sites More sharing options...
LowIQinvestor Posted April 21, 2015 Share Posted April 21, 2015 Interesting news about Liberty getting deeper into mobile. I wouldn't discount Sky Plc. as a top competitor: http://www.wsj.com/articles/sky-earnings-boosted-by-subscriber-growth-in-u-k-germany-1429608660?mod=yahoo_hs http://www.wsj.com/articles/sky-telefonica-u-k-announce-mobile-telecom-partnership-1422531774 Link to comment Share on other sites More sharing options...
Liberty Posted May 8, 2015 Author Share Posted May 8, 2015 Q1: http://www.libertyglobal.com/pdf/presentations/Liberty-Global-Q1-2015-Investor-Call-Presentation-FINAL.pdf http://www.libertyglobal.com/pdf/press-release/Liberty-Global-Earnings-Release-Q1-15-FINAL.pdf Link to comment Share on other sites More sharing options...
Liberty Posted May 19, 2015 Author Share Posted May 19, 2015 http://www.bloomberg.com/news/articles/2015-05-19/malone-says-liberty-vodafone-make-great-fit-in-western-europe Malone Says Liberty, Vodafone Make ‘Great Fit’ in Europe Link to comment Share on other sites More sharing options...
Liberty Posted May 28, 2015 Author Share Posted May 28, 2015 http://www.reuters.com/article/2015/05/28/vodafone-liberty-investors-idUSL5N0YJ1FC20150528 Link to comment Share on other sites More sharing options...
loganc Posted May 28, 2015 Share Posted May 28, 2015 http://www.reuters.com/article/2015/05/28/vodafone-liberty-investors-idUSL5N0YJ1FC20150528 Very interesting to think about the potential of a deal here. What are the chances that they would be able to keep Kabel Deutchland? Link to comment Share on other sites More sharing options...
Liberty Posted June 2, 2015 Author Share Posted June 2, 2015 WSJ on possible LBTYA and VOD deal: http://www.wsj.com/articles/liberty-globals-reach-for-vodafone-could-fall-short-1433262523 Link to comment Share on other sites More sharing options...
Liberty Posted June 4, 2015 Author Share Posted June 4, 2015 Again: http://www.bloomberg.com/news/articles/2015-06-04/vodafone-said-to-discuss-options-including-a-merger-with-liberty Link to comment Share on other sites More sharing options...
Liberty Posted June 5, 2015 Author Share Posted June 5, 2015 Talks for asset swap: http://bloom.bg/1KItWqj Link to comment Share on other sites More sharing options...
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