LILA - Liberty Global Latin America tracker

[xtreeq]

Thanks Liberty

[Shooter MacGavin]

anyone have any insight as to why LILA/K is off 11-12% today? is it a delayed reaction to earnings?

[namo]

That's my best guess as well. I bought more yesterday.

[Shooter MacGavin]

hi, it's actually because a wunderlich securities analyst lowered its price target from $59 to $43 while maintaining a buy.  I didn't see the note, but I'm sure it was the classic sell side "chasing the stock" phenomenon. 

[PSV_Cannibal]

I'm unsure as to why this stock keeps selling off (down 35% since beginning of June), but I suspect it's related to motivated selling; 119 shares were distributed to Liberty Global shareholders in early July. Trading volume has since been significantly higher. Can anyone attribute the drop in share price to specific events in the company?  I bought more yesterday and today.

[Liberty]

Almost 300-slide presentation on LiLAC:

 

http://valueseekerinvestments.blogspot.com/2016/09/lilac-lilabk-liberty-latam-287-slides.html

 

Follow him on Twitter: @find_me_value

[frommi]

Almost 300-slide presentation on LiLAC:

 

http://valueseekerinvestments.blogspot.com/2016/09/lilac-lilabk-liberty-latam-287-slides.html

 

Follow him on Twitter: @find_me_value

 

I always get question marks when i see so much stuff to defend an investment, shouldn`t a compelling investment be easy to describe?

While i don`t think that LILA is expensive here, i really wonder why Malone hasn`t bought one share in the open market until now when this is such a compelling opportunity? When i see how much he is selling of his other holdings, he should have plenty of cash.

Maybe it isn`t the opportunity of the year at an EV/EBITDA of 8 or 9. At a very cheap multiple of 5x2017 EBITDA it would trade down to 7$, at 6x it trades down to 14$. (And yes even LBTYA traded down to that level once in the past decade).

[ratiman]

So I didn't know anything about LILA before opening this slide deck, but I did own some UCOMA back in the day and remember that cable seemed like a poor fit for a region that's mostly islands and mountains. Wouldn't it just be easier to shoot up some satellites than try to wire a whole region that's so spread out? This is not one big contiguous market like the US. The whole argument for cable consolidation in the US is that there are economies of scale, but doesn't that argument cut the other way in Latin America? So I do a quick search for satellite . . . OK, satellite is crushing VTR in Chile. Alright, well maybe it's doing better on the islands . . . Dish and Movil moving into Puerto Rico, market shrinking. That seems ominous.  Closes slide deck . . .

[ni-co]

So I didn't know anything about LILA before opening this slide deck, but I did own some UCOMA back in the day and remember that cable seemed like a poor fit for a region that's mostly islands and mountains. Wouldn't it just be easier to shoot up some satellites than try to wire a whole region that's so spread out? This is not one big contiguous market like the US. The whole argument for cable consolidation in the US is that there are economies of scale, but doesn't that argument cut the other way in Latin America? So I do a quick search for satellite . . . OK, satellite is crushing VTR in Chile. Alright, well maybe it's doing better on the islands . . . Dish and Movil moving into Puerto Rico, market shrinking. That seems ominous.  Closes slide deck . . .

 

Yeah, right, that Malone guy has no idea what he's talking about! Why own cable networks when you can own satellites?! Oh, wait, actually, he once controlled DirecTV, and then… —he sold it. I wonder why.

 

I think you still don't know anything about LILA.

 

Almost 300-slide presentation on LiLAC:

 

http://valueseekerinvestments.blogspot.com/2016/09/lilac-lilabk-liberty-latam-287-slides.html

 

Follow him on Twitter: @find_me_value

 

I always get question marks when i see so much stuff to defend an investment, shouldn`t a compelling investment be easy to describe?

While i don`t think that LILA is expensive here, i really wonder why Malone hasn`t bought one share in the open market until now when this is such a compelling opportunity? When i see how much he is selling of his other holdings, he should have plenty of cash.

Maybe it isn`t the opportunity of the year at an EV/EBITDA of 8 or 9. At a very cheap multiple of 5x2017 EBITDA it would trade down to 7$, at 6x it trades down to 14$. (And yes even LBTYA traded down to that level once in the past decade).

 

He just bought a lot of it in a roundabout way — by agreeing to the CWC deal.

[ratiman]

Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

[Spekulatius]

Almost 300-slide presentation on LiLAC:

 

http://valueseekerinvestments.blogspot.com/2016/09/lilac-lilabk-liberty-latam-287-slides.html

 

Follow him on Twitter: @find_me_value

 

I always get question marks when i see so much stuff to defend an investment, shouldn`t a compelling investment be easy to describe?

While i don`t think that LILA is expensive here, i really wonder why Malone hasn`t bought one share in the open market until now when this is such a compelling opportunity? When i see how much he is selling of his other holdings, he should have plenty of cash.

Maybe it isn`t the opportunity of the year at an EV/EBITDA of 8 or 9. At a very cheap multiple of 5x2017 EBITDA it would trade down to 7$, at 6x it trades down to 14$. (And yes even LBTYA traded down to that level once in the past decade).

 

9x EBITDA is not cheap for LILA. For one thing, their cost of debt is much higher than for similar assets in the USA or Europe, because the interest rates in local currencies are much higher. Sure, LILA's debt is mostly USD, but that means that they need to by swaps to protect against currency drops. Some of LILA's markets are very competitive as well (Chile, Puerto Rico). I don't see the bargain here, but if it does trade down for <7x EV/EBITDA, I would take a sharp look.

[Munger_Disciple]

I find the 300 slide presentation strange. Very long, unorganized, repetitive and almost no discussion on why the current valuation is cheap.

[giofranchi]

I think LILA/LILAK has lots of opportunities for profitable growth. But it also poses some risks that other cos in the "Malone family" don't run. I cannot be sure why it has sold off, and if the only reason might be a technical one.

Therefore, I have sold and used the proceeds to buy more LMCA. If the original thesis about LILA is still fine, there will be many chances to buy it in the future.

 

Cheers,

 

Gio

[Munger_Disciple]

But it also poses some risks that other cos in the "Malone family" don't run.

 

Can you expand on these LILA specific risks that other Malone entities don't have?

[giofranchi]

But it also poses some risks that other cos in the "Malone family" don't run.

 

Can you expand on these LILA specific risks that other Malone entities don't have?

 

Basically those risks of investing in a region with little political stability.

 

Cheers,

 

Gio

[Liberty]

I find the 300 slide presentation strange. Very long, unorganized, repetitive and almost no discussion on why the current valuation is cheap.

 

This isn't a VIC long thesis. The author just wanted to do a deep dive on it to better understand the pieces and market dynamics, not necessarily trying to convince anyone to buy afaik.

 

But if you don't like it, I'm sure you can ask the author for a full refund.

[maybe4less]

Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

 

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

[Liberty]

Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

 

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

 

Even for video, satellite's advantage was bigger before cable started going all digital.

[muscleman]

Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

 

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

 

Even for video, satellite's advantage was bigger before cable started going all digital.

 

How does digital video close the satellite's advantage? Can you please elaborate?

[Liberty]

Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

 

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

 

Even for video, satellite's advantage was bigger before cable started going all digital.

 

How does digital video close the satellite's advantage? Can you please elaborate?

 

For a while, satellite was all digital and carried tons of channels while cable was a mix of analog and digital channels, with the analog channels eating up a ton of bandwidth and restricting the total number of channels that could be carried. So it was a lower-quality offering that that couldn't carry as many channels.

 

Now that cable is going all digital, it can carry more channels that are all HD, and the removal of analog channels frees up a lot of space to take up broadband speeds up, which makes the overall offering more compelling.

[muscleman]

Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

 

Satellite has an advantage over cable as a video product, but not as a two-way broadband internet product. The relative importance to consumers of broadband vs. video is increasing.

 

Even for video, satellite's advantage was bigger before cable started going all digital.

 

How does digital video close the satellite's advantage? Can you please elaborate?

 

For a while, satellite was all digital and carried tons of channels while cable was a mix of analog and digital channels, with the analog channels eating up a ton of bandwidth and restricting the total number of channels that could be carried. So it was a lower-quality offering that that couldn't carry as many channels.

 

Now that cable is going all digital, it can carry more channels that are all HD, and the removal of analog channels frees up a lot of space to take up broadband speeds up, which makes the overall offering more compelling.

 

 

Thank you!

[ni-co]

Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

 

My point was not to make an ad hominem argument but to make you think about why he did it. If you follow the Liberty threads in this forum you know that it's about broadband – and not video. It's all about data capacity. Capacity for internet over satellite is so limited that I'd argue that we aren't even talking about the same business/industry. So, of all of the arguments you could make why not to invest into LILA "satellites" is not a good one.

[ratiman]

Well I was the dope who rode TCI Satellite to zero when DTV and DISH where beating Malone with a club, so I don't think Malone is always right or wrong. Ad hominem arguments (eg Eddie Lampert must know what  he's doing) are the worst. If cable is so competitive, how come VTR surrendered 30 points of market share to satellite?  And what reason is there to think that trend won't continue?

 

My point was not to make an ad hominem argument but to make you think about why he did it. If you follow the Liberty threads in this forum you know that it's about broadband – and not video. It's all about data capacity. Capacity for internet over satellite is so limited that I'd argue that we aren't even talking about the same business/industry. So, of all of the arguments you could make why not to invest into LILA "satellites" is not a good one.

 

OK thanks for clarifying. Nobody thinks data over satellites is an option. The competitive options, I'm guessing, are broadband vs. satellite+mobile. In PR it's Liberty PR vs. Movil/Dish, so broadband is really competing with a better mobile plan, right? In the US a consumer might choose all three but is that the case in LA?  The very interesting slide deck makes some points about low uptake of broadband among lower income groups in US and LA, and most consumers in LA are low income by our standards. Sure, cable broadband is the superior product, but is there demand for it versus mobile from your typical low income consumer? I don't know but I suspect the real investment case for LILA is not "the Puerto Rican cable market is very exciting" but instead confidence in Malone to work his magic. And yes, that is an ad hominem.

[muscleman]

Q3 out. Stock dropped sharply.

https://www.sec.gov/Archives/edgar/data/1570585/000157058516000862/exhibit991lgearningsreleas.htm

 

CWC's OCF number is disappointing. The promotional Mike Fries kept dodging the numbers.

 

""LiLAC, our Latin American and Caribbean tracking stock, reported 5% rebased OCF growth in Q3. CWC's7 Q3 financial results were below our expectations, but we have already started laying the groundwork for improved future performance. We now expect LiLAC Group, excluding Cable & Wireless, to achieve 6% rebased OCF growth for full year 2016. With respect to CWC, we expect that the business will deliver OCF between $215 and $225 million8 in Q4 2016"

 

Where is the Q3 number?????

 

I finally found it buried down pages below.

 

"Finally, our recently acquired CWC business, reported a 4% rebased revenue contraction during Q3 2016"  :(

 

 

 

 

[Shooter MacGavin]

a bit of an extreme reaction no?  although down 4% on an apples to apples for rev is pretty shocking.