This presentation is long on purpose, as not much is written about the specific markets that LiLAC is in, but rather "broadband penetration is lower in LatAm, Malone indirectly bought more of LiLAC through the C&W purchase, LBTYA management keeps touting the fragmented market and large M&A opportunity, etc.
I did not organize this to be in a stock pitching contest, so don't expect it to be short and sweet and me to sell you on buying LiLAC immediately. Some of it may be long-winded, some repetitive, some unnecessary. Scroll through sections or areas that me be or interest, feel free to reach out with any questions or comments.
The stock is not quite dirt cheap, even despite the share decline. However, at ~$28.50/share, I think LILA represents an decently attractive opportunity, due to:
- Newbuild opportunity and progress in Chile (VTR)
- Improving mobile networks across legacy Cable & Wireless footprint to meet data growth
- Data growth will result in increased fixed broadband growth
- Fixed-mobile divergence in Cable & Wireless footprint will drive penetration, ARPU, bundling, and lower cost to carry data traffic
- Submarine cable assets will be tremendous competitive advantage as Latin America continues to experience strong mobile/fixed data traffic growth, as the Cable & Wireless sub-sea assets are the most comprehensive in the region, continue to be top ranked year-in, year-out
- Synergy targets - both on operating costs and through capital reductions - will improve FCF
- Levered Equity returns: minimal 2016 free cash flow will lead to likely zero shares being repurchases; however, 2017+ will introduce the levered-equity returns many Malone followers know of
There are some risks, but overall, I think it is difficult to lose money at current pricing over the next ~3+ years, and there are a number of levers LiLAC can pull to bring strong returns on investment