Liberty Posted June 6, 2015 Author Share Posted June 6, 2015 The plot thickens... http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/telecoms/11655806/Liberty-boss-in-secret-talks-over-merger-with-Vodafone.html Link to comment Share on other sites More sharing options...
Liberty Posted June 9, 2015 Author Share Posted June 9, 2015 http://www.wsj.com/articles/liberty-global-ceo-sees-mobile-services-as-important-growth-driver-for-cable-firms-1433864787 Link to comment Share on other sites More sharing options...
saltybit Posted June 9, 2015 Share Posted June 9, 2015 Is there a nice summary somewhere of the landscape and all the mergers happening in the telecom and cable space in Europe? Edit: The best one I found so far is this: http://www.wsj.com/articles/european-telecom-companies-race-to-merge-1433160138 Link to comment Share on other sites More sharing options...
AJDelphi Posted June 25, 2015 Share Posted June 25, 2015 Missed the Annual Meeting webcast. Did anyone record it by chance?! Link to comment Share on other sites More sharing options...
Liberty Posted June 25, 2015 Author Share Posted June 25, 2015 Missed the Annual Meeting webcast. Did anyone record it by chance?! Isn't it here? http://www.libertyglobal.com/ir-presentations-webcasts.html Link to comment Share on other sites More sharing options...
AJDelphi Posted June 25, 2015 Share Posted June 25, 2015 For me it just says "The live webcast has ended" with the typical webcast music Link to comment Share on other sites More sharing options...
Liberty Posted June 25, 2015 Author Share Posted June 25, 2015 For me it just says "The live webcast has ended" with the typical webcast music It'll probably be uploaded later. Here's my recording. I didn't get the formal part of it, and there were a few technical problems at the beginning. This is Fries' presentation plus some Q&A: https://www.dropbox.com/s/rjpffg0usi29n3m/2015-june-AGM-LBTYA.m4a?dl=0 Link to comment Share on other sites More sharing options...
merkhet Posted June 25, 2015 Share Posted June 25, 2015 For me it just says "The live webcast has ended" with the typical webcast music It'll probably be uploaded later. Here's my recording. I didn't get the formal part of it, and there were a few technical problems at the beginning. This is Fries' presentation plus some Q&A: https://www.dropbox.com/s/rjpffg0usi29n3m/2015-june-AGM-LBTYA.m4a?dl=0 Awesome. Thanks! Link to comment Share on other sites More sharing options...
AJDelphi Posted June 25, 2015 Share Posted June 25, 2015 Liberty, I knew you were always good for recordings! Many Thanks :) Link to comment Share on other sites More sharing options...
Liberty Posted June 30, 2015 Author Share Posted June 30, 2015 LILAC presentation: http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf Link to comment Share on other sites More sharing options...
rpadebet Posted July 1, 2015 Share Posted July 1, 2015 LILAC presentation: http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf Thank you liberty. This is one stock I was so looking forward to this year. Hope it trades at a reasonable price to allow me to accumulate. Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share Edit: just saw the when issued trading at around 38. Maybe I am missing something here. Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill. Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs. Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing? Link to comment Share on other sites More sharing options...
junto.investing Posted July 1, 2015 Share Posted July 1, 2015 LILAC presentation: http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf Thank you liberty. This is one stock I was so looking forward to this year. Hope it trades at a reasonable price to allow me to accumulate. Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share Edit: just saw the when issued trading at around 38. Maybe I am missing something here. Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill. Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs. Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing? If you can get it at $38 - agreed, it's cheap. However, the spread on this thing has been crazy. Link to comment Share on other sites More sharing options...
rico1181 Posted July 1, 2015 Share Posted July 1, 2015 Rpadebet: Not sure how you came up with 8x FCF. Depending on how one calculates FCF, I came up with a range of 75mm - 115mm for 2014 FCF. This would imply a multiple of 15x-23x FCF. Am I missing something here? LILAC presentation: http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf Thank you liberty. This is one stock I was so looking forward to this year. Hope it trades at a reasonable price to allow me to accumulate. Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share Edit: just saw the when issued trading at around 38. Maybe I am missing something here. Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill. Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs. Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing? Link to comment Share on other sites More sharing options...
Fat Pitch Posted July 1, 2015 Share Posted July 1, 2015 LILAC presentation: http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf Thank you liberty. This is one stock I was so looking forward to this year. Hope it trades at a reasonable price to allow me to accumulate. Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share Edit: just saw the when issued trading at around 38. Maybe I am missing something here. Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill. Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs. Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing? Careful OCF is not the same as cash flow from operations. According to their appendix "As we use the term, operating cash flow is defined as revenue less operating and selling, general and administrative expenses (excluding sharebased compensation, depreciation and amortization, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items)" That means interest expense and taxes are not subtracted out from their figures. FCF is probably about 110mm. The question here is how fast will that FCF increase? There's operating leverage at play here, but for every $1 in revenue how much of that trickles down to FCF? Link to comment Share on other sites More sharing options...
rpadebet Posted July 2, 2015 Share Posted July 2, 2015 LILAC presentation: http://www.libertyglobal.com/pdf/presentations/LiLAC-Group-Presentation-June-2015-FINAL.pdf Thank you liberty. This is one stock I was so looking forward to this year. Hope it trades at a reasonable price to allow me to accumulate. Any guesses /estimates as to price? My quick rough estimate gets me to about 100 bucks a share Edit: just saw the when issued trading at around 38. Maybe I am missing something here. Assuming 45 mill of shares outstanding (5% of 880 mill lbty shares), gives this a market cap of approximately 1.7 bill. Adding the 2 BIL in debt, gives EV of 3.7 bill. This is just 8x 2014 OCF and 3x 2014 Revs. Market cap is only 8xfcf. Seems very cheap compared to the parent. What am I missing? Careful OCF is not the same as cash flow from operations. According to their appendix "As we use the term, operating cash flow is defined as revenue less operating and selling, general and administrative expenses (excluding sharebased compensation, depreciation and amortization, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items)" That means interest expense and taxes are not subtracted out from their figures. FCF is probably about 110mm. The question here is how fast will that FCF increase? There's operating leverage at play here, but for every $1 in revenue how much of that trickles down to FCF? Thanks. I did not see that, so basically their OCF is Closer to ebitda than true OCF. I still think based on the other multiples it seems cheaper given their runway @38. But who knows where it will actually trade.. Link to comment Share on other sites More sharing options...
ni-co Posted July 2, 2015 Share Posted July 2, 2015 I think LILA is very attractive at these prices. Think about Malone's rule of thumb of buying cable cos at 10x EV/EBITDA. Add to this the most attractive growth prospects in the industry. Look at how ripe Latin America is for a roll up. And also keep in mind that they share their balance sheet with LBTYA and are therefore in prime position to perform this roll up. I'm in search of businesses that are going to generate sustainable, ideally growing cash flows in a low growth world and LILA might just be such a business. Link to comment Share on other sites More sharing options...
loganc Posted July 3, 2015 Share Posted July 3, 2015 I think LILA is very attractive at these prices. Think about Malone's rule of thumb of buying cable cos at 10x EV/EBITDA. Add to this the most attractive growth prospects in the industry. Look at how ripe Latin America is for a roll up. And also keep in mind that they share their balance sheet with LBTYA and are therefore in prime position to perform this roll up. I'm in search of businesses that are going to generate sustainable, ideally growing cash flows in a low growth world and LILA might just be such a business. When you are doing the EV/EBITDA calculation, how are you thinking about the fact that Liberty PR has a significant minority interest? It seems to me like the easiest way to get to a valuation that accounts for the minority interest is a FCF per share calculation. That being said, I don't think it is that hard to get close to 10x if one computes the EV/EBITDA just based on VTR (i.e. ignoring Liberty PR+Choice debt and EBITDA and keeping equity value the same) assuming some margin expansion at VTR. Link to comment Share on other sites More sharing options...
Packer16 Posted July 4, 2015 Share Posted July 4, 2015 I think LILA is very attractive at these prices. Think about Malone's rule of thumb of buying cable cos at 10x EV/EBITDA. Add to this the most attractive growth prospects in the industry. Look at how ripe Latin America is for a roll up. And also keep in mind that they share their balance sheet with LBTYA and are therefore in prime position to perform this roll up. I'm in search of businesses that are going to generate sustainable, ideally growing cash flows in a low growth world and LILA might just be such a business. Malone's rule of thumb from the Outsiders was to buy systems at 5x EBITDA, sell them at 10x EBITDA and buyback stock at 7x EBITDA. He would also target 5x EBITDA leverage. Packer Link to comment Share on other sites More sharing options...
ni-co Posted July 5, 2015 Share Posted July 5, 2015 I think LILA is very attractive at these prices. Think about Malone's rule of thumb of buying cable cos at 10x EV/EBITDA. Add to this the most attractive growth prospects in the industry. Look at how ripe Latin America is for a roll up. And also keep in mind that they share their balance sheet with LBTYA and are therefore in prime position to perform this roll up. I'm in search of businesses that are going to generate sustainable, ideally growing cash flows in a low growth world and LILA might just be such a business. When you are doing the EV/EBITDA calculation, how are you thinking about the fact that Liberty PR has a significant minority interest? It seems to me like the easiest way to get to a valuation that accounts for the minority interest is a FCF per share calculation. That being said, I don't think it is that hard to get close to 10x if one computes the EV/EBITDA just based on VTR (i.e. ignoring Liberty PR+Choice debt and EBITDA and keeping equity value the same) assuming some margin expansion at VTR. Using their OCF numbers as a proxy for EBITDA, my back of the envelope calculation: LiLAC OCF: $480 Debt: $2070 Minority Interest PR: OCF: $200 x 0.4 = $80 Debt: $670 x 0.4 = $270 LiLAC net: OCF: $400 Debt: $1,800 Market Cap: 43.9m shares x $50 = $2,200m Net EV $1,800m + $2,200m = $4,000m EV/EBITDA = 4,000/400 = 10 Malone's rule of thumb from the Outsiders was to buy systems at 5x EBITDA, sell them at 10x EBITDA and buyback stock at 7x EBITDA. He would also target 5x EBITDA leverage. Packer Malone looks at levered cash flows. So, the multiple is highly dependent on the general level of interest rates/financing cost. The lower the cost of the company's leverage (which it can lock in for the mid to long term) the higher the price you can pay for companies with very steady cash flows. I'm pretty sure that Malone (could also have been Mike Fries or Greg Maffei) has mentioned in an interview within the last 2-3 years that he generally considers prices up to 10x to be reasonable considering the low cost of leverage. Link to comment Share on other sites More sharing options...
ni-co Posted July 5, 2015 Share Posted July 5, 2015 I think the way to think about this and the way Malone probably thinks about this is: EBITDA/EV is your gross return before borrowing cost. So, at 10x a company generates a 10% gross ROI – with the "I" being your investment into the company as a shareholder. If it's finance cost is 5.5% (which is the case for LBTYA) buying it at a 10% return is a good price. If the borrowing cost is closer to 8%, which it was a few years ago, a 10x multiple is probably too expensive. You can't just slap a multiple on a company and say: This is cheap/expensive. Keep in mind that this only works with steady (ideally even growing) cash flows. You have to be able to calculate future cash flows with a high probability, otherwise levering up the balance sheet is very risky. This is why this line of thinking makes sense for a cable co but doesn't make sense for almost any "normal" company. It also doesn't take into account maintenance capex and tax. As long as you optimize for low GAAP earnings taxes are under control (Malone: "I'd rather pay interest than taxes."). And for cable networks maintenance capex is also very low once you've built your network. Link to comment Share on other sites More sharing options...
Packer16 Posted July 5, 2015 Share Posted July 5, 2015 Your math makes sense however, I would like to see the reference as 10x EBITDA was his selling point a few years ago. I found the following which states 7-8x EV/EBIDTA makes sense post synergy with 3% interest rates: http://brooklyninvestor.blogspot.com/2013/05/charter-communications-chtr.html Other Outsiders have used unlevered low double digit return on investment as good buying points also and the 7-8x is more consistent with this valuation level. Packer Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 5, 2015 Share Posted July 5, 2015 It also doesn't take into account maintenance capex and tax. As long as you optimize for low GAAP earnings taxes are under control (Malone: "I'd rather pay interest than taxes."). GAAP and tax accounting are two different things. GAAP accounting will have a reconciliation between the taxes paid and GAAP tax expense. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 5, 2015 Share Posted July 5, 2015 In regards to the spinoff, I think investors should be more excited about Charter than Liberty Global, and more excited about Global than LILAC. In terms of earnings growth, I think that Charter has the most potential. Charter is coming from a base with low penetration and poor operations. So it has a lot of potential from increased penetration, better customer service / less churn, etc. etc. Similarly, Global's assets have lower penetration than LILAC assets. They have a lot more room for growth. I also think that Rutledge is a better CEO than Fries. For example, Liberty Global customers hate their set-top box due to serious user interface issues and Global's MyPrime over-the-top service looks like it will fail. MyPrime has very poor reviews relative to Netflix if both services are available in a particular country. Link to comment Share on other sites More sharing options...
loganc Posted July 5, 2015 Share Posted July 5, 2015 In regards to the spinoff, I think investors should be more excited about Charter than Liberty Global, and more excited about Global than LILAC. In terms of earnings growth, I think that Charter has the most potential. Charter is coming from a base with low penetration and poor operations. So it has a lot of potential from increased penetration, better customer service / less churn, etc. etc. Similarly, Global's assets have lower penetration than LILAC assets. They have a lot more room for growth. I also think that Rutledge is a better CEO than Fries. For example, Liberty Global customers hate their set-top box due to serious user interface issues and Global's MyPrime over-the-top service looks like it will fail. MyPrime has very poor reviews relative to Netflix if both services are available in a particular country. If LILAC didn't offer a differentiated investment opportunity (i.e. higher growth potential in a higher risk geography) to Global, then why do the tracking stock in the first place? Link to comment Share on other sites More sharing options...
Liberty Posted July 5, 2015 Author Share Posted July 5, 2015 In regards to the spinoff, I think investors should be more excited about Charter than Liberty Global, and more excited about Global than LILAC. In terms of earnings growth, I think that Charter has the most potential. Charter is coming from a base with low penetration and poor operations. So it has a lot of potential from increased penetration, better customer service / less churn, etc. etc. Similarly, Global's assets have lower penetration than LILAC assets. They have a lot more room for growth. I also think that Rutledge is a better CEO than Fries. For example, Liberty Global customers hate their set-top box due to serious user interface issues and Global's MyPrime over-the-top service looks like it will fail. MyPrime has very poor reviews relative to Netflix if both services are available in a particular country. Where do you get your info about customer satisfaction/quality of the products and how do you avoid sample bias? Link to comment Share on other sites More sharing options...
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