Many readers here may not read other platforms, but my best guess for a while has been that Tigo is in negotiations with SBAC on Lat and a final deal announcement may just be a question of timing: https://x.com/gilmourkh/status/1831984826519314695
Yes, it should enough, but it's also possible that they can divest some fiber.
They need to clear the hurdle of 2.5 bi-annually, at the full year and half year marks. If they can get there pretty much organically this Q4, which is what they have guided, then they only need about $300m from asset sales to fill the 1 billion for Colombia if they meet their guidance of just below 700m efcf for '25. And the leverage multiple would also be lower from a higher EBITDA bleeding into the TTM. I don't think Colombia will close until H2-25, so the first point at which they will be measured against the 2.5x number after that would be after Q4-25.
Should not be a problem realistically, but if it is from some reason they also have plenty of time to arrange new financing or do a merger of some kind to account for that.
I guess the other big question (also for sustaining a per share 40+ valuation) is long term sustainability of 700m+ efcf. In-market consolidation should definitely help restore market dynamics in Colombia as should likely be happening now in Panama with Digicel's exit. Two player markets with sound market dynamics in Colombia, Guatemala and Panama should be huge. On the other, side opex and capex efficiencies have been aggresive; FY 24 Capex should end up in the low 10's. I stand with the "if it breaks we'll fix it" vision but overshooting is still a risk. I guess time will tell..
I enjoy reading you're posts, find them extremely insightful. Thanks!
Low teens capex for a mobile heavy integrated telco doesn't seem like crazy kind of level for the longer term. Even if they up the dollar numbers of capex in Colombia later, it should be a much smaller proportion of revenue at that stage than the fiber buildouts they did there during and just post-pandemic. 5g capex also seems bound to be a much more slow bleed in these countries overall. But on the other hand, Niel will be opportunistic if it is warranted, he has pushed capex up to 20% at times before too. It's just a bit hard to see that in middle-income 2p markets with relatively low urbanization rates.
I think people are completely sleeping on the market structure changes here.
you struck the right balance on salient narrative.
little sad to see ramos now leaving completely, did not get much credit for setting up a lot of + current status, and also did not battle niel for his own personal career path.
If Lati is happening soon do you think they will only use the money to delever below 2,5 times then given your view of buybacks not happening. They will for sure have a strong balance sheet, if that would be the case.
Correct, I don't think buybacks are in the near future. It's all deleveraging until the Colombia deal. Also, if not for any other reason than that when/if Atlas holds just shy of 50%, then buybacks would trigger CoC (coupled with a downgrade), which could be adverse to the company if it is not properly planned for.
Keep in mind the following: The B2-facility will come in play first when Atlas/XN starts buying stocks post-bid and the levers in the B2-agreement only has effect/control-stations on a halfyear-basis. In other words, any of the following quarterly reportage could easily be a disaster (witch then would probably put the purchase-mandate in play. That would in return put the B2-levers in play for the following quarter. (Demanding a debtqoate below 2,5 f.example))
In other words, a poor performance for any given bi-quarterly resultat would NOT be surprising. In effect, it would be surprising if one of the coming 3 quarterly reports would’nt be a negative surprise. (Geting air to the outstanding mandate and ample of time to fix the debtratio to the following quarter….
Many readers here may not read other platforms, but my best guess for a while has been that Tigo is in negotiations with SBAC on Lat and a final deal announcement may just be a question of timing: https://x.com/gilmourkh/status/1831984826519314695
Any thoughts on that timing?
Logically it should really be anytime soon.
Great post!
Is Lati disposal and 600m eFCF enough to delever below 2.5 AND acquire Colombia at combined +/- $1b? Any other asset/operation disposal on sight?
Yes, it should enough, but it's also possible that they can divest some fiber.
They need to clear the hurdle of 2.5 bi-annually, at the full year and half year marks. If they can get there pretty much organically this Q4, which is what they have guided, then they only need about $300m from asset sales to fill the 1 billion for Colombia if they meet their guidance of just below 700m efcf for '25. And the leverage multiple would also be lower from a higher EBITDA bleeding into the TTM. I don't think Colombia will close until H2-25, so the first point at which they will be measured against the 2.5x number after that would be after Q4-25.
Should not be a problem realistically, but if it is from some reason they also have plenty of time to arrange new financing or do a merger of some kind to account for that.
I guess the other big question (also for sustaining a per share 40+ valuation) is long term sustainability of 700m+ efcf. In-market consolidation should definitely help restore market dynamics in Colombia as should likely be happening now in Panama with Digicel's exit. Two player markets with sound market dynamics in Colombia, Guatemala and Panama should be huge. On the other, side opex and capex efficiencies have been aggresive; FY 24 Capex should end up in the low 10's. I stand with the "if it breaks we'll fix it" vision but overshooting is still a risk. I guess time will tell..
I enjoy reading you're posts, find them extremely insightful. Thanks!
Low teens capex for a mobile heavy integrated telco doesn't seem like crazy kind of level for the longer term. Even if they up the dollar numbers of capex in Colombia later, it should be a much smaller proportion of revenue at that stage than the fiber buildouts they did there during and just post-pandemic. 5g capex also seems bound to be a much more slow bleed in these countries overall. But on the other hand, Niel will be opportunistic if it is warranted, he has pushed capex up to 20% at times before too. It's just a bit hard to see that in middle-income 2p markets with relatively low urbanization rates.
I think people are completely sleeping on the market structure changes here.
brilliant post and replies.
you struck the right balance on salient narrative.
little sad to see ramos now leaving completely, did not get much credit for setting up a lot of + current status, and also did not battle niel for his own personal career path.
Thank you!
Thanks for a great post!
If Lati is happening soon do you think they will only use the money to delever below 2,5 times then given your view of buybacks not happening. They will for sure have a strong balance sheet, if that would be the case.
Correct, I don't think buybacks are in the near future. It's all deleveraging until the Colombia deal. Also, if not for any other reason than that when/if Atlas holds just shy of 50%, then buybacks would trigger CoC (coupled with a downgrade), which could be adverse to the company if it is not properly planned for.
Keep in mind the following: The B2-facility will come in play first when Atlas/XN starts buying stocks post-bid and the levers in the B2-agreement only has effect/control-stations on a halfyear-basis. In other words, any of the following quarterly reportage could easily be a disaster (witch then would probably put the purchase-mandate in play. That would in return put the B2-levers in play for the following quarter. (Demanding a debtqoate below 2,5 f.example))
In other words, a poor performance for any given bi-quarterly resultat would NOT be surprising. In effect, it would be surprising if one of the coming 3 quarterly reports would’nt be a negative surprise. (Geting air to the outstanding mandate and ample of time to fix the debtratio to the following quarter….