Thank you for starting the blog, seems very interesting! I had Millicom on radar for a while and recently bought when the price got too low. Especially telecom seems very unpopular right now. What’s your opinion on the rights offering? I was surprised by the dilution.
I do agree that cables/telecom are unpopular. Millicom is especially unpopular given they did not deliver on their targets in the past. It is also viewed as less stable given it is a Swedish company, also listed in the US which does all of their business in Latam (on previously in Africa). The rights issue has been a big overhang and I hope it cleans the air for the future. I was not shocked by the deep discount - it will not harm me economically as long as I subscribe which I will do - as pretty much all insiders. Deeply discounted risghts issues are a Greenblatt special situation and may well provide an opportunity.
For TIGO, I expect that another special situation, the spin-off of their tower portfolio will be in the cards maybe in the next year or so whicht might unlock some value. For a full bull case in TIGO (maybe to optimistic), it is worth looking at Packer's piece on VIC.
Great post, just a question, I don’t quite understand your reasoning regarding the EUR 17,5bn in value of Bollore’s assets turning into EUR 37bn. The amount of distributable assets doesn’t change with a complex ownership structure so in my reasoning the maximum distribution remains EUR 17,5bn or am I missing something?
Fair point. You are right that there is no magic (or biblical) multiplication of assets out of the blue.
The 37bn is more the result of a thought experiment I performed in order to take into account the self-owned shares in the holding structure.
In my view, there are two way of looking at this: One would be fixing the asset base (17.5bn) and then adjust the number of outstanding shares and, in effect, the "real market cap".
Two is the way I chose, assuming a distribution of everything at BOL and then ODET level. Given that some of the distributions come back to BOL/ODET, you essentially distribute 17.5bn in step 1, get about half of this back, distribute this again and so forth.
Effectively, both methods should yield the same result, yet #2 was somehow more intuitive and easier to calculate for me.
Thank you for starting the blog, seems very interesting! I had Millicom on radar for a while and recently bought when the price got too low. Especially telecom seems very unpopular right now. What’s your opinion on the rights offering? I was surprised by the dilution.
I do agree that cables/telecom are unpopular. Millicom is especially unpopular given they did not deliver on their targets in the past. It is also viewed as less stable given it is a Swedish company, also listed in the US which does all of their business in Latam (on previously in Africa). The rights issue has been a big overhang and I hope it cleans the air for the future. I was not shocked by the deep discount - it will not harm me economically as long as I subscribe which I will do - as pretty much all insiders. Deeply discounted risghts issues are a Greenblatt special situation and may well provide an opportunity.
For TIGO, I expect that another special situation, the spin-off of their tower portfolio will be in the cards maybe in the next year or so whicht might unlock some value. For a full bull case in TIGO (maybe to optimistic), it is worth looking at Packer's piece on VIC.
Great post, just a question, I don’t quite understand your reasoning regarding the EUR 17,5bn in value of Bollore’s assets turning into EUR 37bn. The amount of distributable assets doesn’t change with a complex ownership structure so in my reasoning the maximum distribution remains EUR 17,5bn or am I missing something?
Fair point. You are right that there is no magic (or biblical) multiplication of assets out of the blue.
The 37bn is more the result of a thought experiment I performed in order to take into account the self-owned shares in the holding structure.
In my view, there are two way of looking at this: One would be fixing the asset base (17.5bn) and then adjust the number of outstanding shares and, in effect, the "real market cap".
Two is the way I chose, assuming a distribution of everything at BOL and then ODET level. Given that some of the distributions come back to BOL/ODET, you essentially distribute 17.5bn in step 1, get about half of this back, distribute this again and so forth.
Effectively, both methods should yield the same result, yet #2 was somehow more intuitive and easier to calculate for me.
Hope this clarifies your point.
Thanks, the opaque structure definately requires some creative thinking to
unravel (and set up).