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Very amusing heavy. Sarcasm has always been a strength of this great nation of ours and it’s good to see it remains as such.
Fleccy,
Even though I do know the difference between equity and assets I have never claimed to be an expert. Even with my very limited knowledge I do know that when debt is extremely high like BT the ROE can be very misleading. BT's credit rating at present is low this invariably effects a BT's ability to increase borrowing. I would therefore imagine that debt being 180 % of equity and £3.5 billion above capitalisation both to be factors. I know you also have holdings in Vodafone so although VOD have debts of well over 40 billion their equity is £63 billion and are capitalised at £51 billion.
"Total Equity: 10,167.00"
Ok i assume this is shareholder equity, show me why this affects the amount BT can borrow? You claim to understand how this works, explain how shareholder equity relates to corporate bond issuance. You might also be able to explain things like ROE, ROA and other related topics .
I'm still not convinced about investment in India. I am a VOD holder and the Indian government welcomed Vodafone with open arms and then pulled the rug once they were heavily committed.
Don't worry now that we are out of the EU we will be making trade deals all over the world. BT will be part of this bright new future.China and India is a great market for us and Boris will drive a great bargain in the upcoming talks.As we know Liam Fox had the deals oven ready just needs a signature.
This is an extract from the current published accounts
Capital & reserves:
Share Capital: 499.00
Share Premium Account: 1,051.00
Other Reserves: 4,698.00 6,995.00 7,435.00 8,992.00 1,320.00
Retained Earnings: 3,919.00 1,366.00
Shareholders Funds: 10,167.00
Minority Interests / Other Equity: n/a n/a n/a n/a n/a
Total Equity: 10,167.00
"BT's equity is at present 10.3 billion. BT,s debt is now already 18.3 billion which is around 177%( and is rising) so another 1.5 billion will put it up above 200%."
Openreach Is valued around £13.5bn alone on its regulated asset base (RAB), so where does this 10.3 billion come from? Are you being a little tinker and making things up again. Go and stand in the corner.
Fleccy,
BT's equity is at present 10.3 billion. BT,s debt is now already 18.3 billion which is around 177%( and is rising) so another 1.5 billion will put it up above 200%.
Fleecy.
"The reason why they aren't is because they can not. Buying back 10% of the shares would push up debt to 200% of equity."
Can you post the maths on that and an explanation please? Because i have no idea what you're saying.
Perhaps another poster can supply the maths, eh...
" Are you still convinced that BT,s profit will be above £2 billion?. WATCH THIS SPACE!!!! "
----------------------
Avro, well I am - for this year ending at least anyway, I'm 'fairly' certain BT can haul in £2bn in net profits.
Here's why:
I think the forecasts are overly bearish as 2 out of 3 of the last quarters of forecasts have missed the mark to the underside considerably. The new full year consensus forecasts for net profit are averaging £1.983bn.
So yes THEY are forecasting under £2bn. (But look at their track record this past year - 2 misses and 1 hit).
To check on that sub £2bn, I added back, starting with this new Q4 forecast of £450.5m and added the 9 month running total as reported in Q3 of £1,525m and got a year end net profit from that, of £1,975.5m.
Yet in the annual estimates (will post on those later - with short posts hopefully) they are showing the net profit as closing HIGHER at £1,983m as stated above. Only a small difference - but there should be no difference. I've checked the mean and the median and it still doesn't add up. Of course you must allow 2% or 3% forecast error, but the highest forecast was for a stonking £2,226m with the lowest (probably DB) coming in at £1,866m.
However, until proven wrong you have to (just have to!) refer to Jansen's statement of:
- "BT delivered results slightly below our expectations for the third quarter of the year,
BUT WE REMAIN ***ON TRACK*** TO MEET OUR OUTLOOK FOR THE FULL YEAR".
To me, that doesn't tie in with the brand new Q4 Consensus forecasts of a scabby Q4 of £450.5m just because Q3 was the poor cousin to Q1 & Q2
- My forecast is for an 'easy' minimum Q4 of £475m and thus £2bn for net profit, and probably won't be surprised if the first figure is even higher, and back to starting with a ' 5 ', so a net profit of £2bn+
(IMO, of course).
"That would be a bad move on many levels. OFCOM's primary objective is to promote competition and protect consumers. If BT did what you suggest, OFCOM would just level the playing field under pricing controls and the money would just go up in smoke and BT wouldn't get to beat the competition on Fibre coverage"
Just to be clear, I'm not suggesting that BT should take that approach. I'm trying to make the point that BT have perhaps been a bit of a soft touch. If OFCOM's primary objective is to promote competition then they also need to look after the current providers.
I don't have a clue what Avrohom's saying either.
"The reason why they aren't is because they can not. Buying back 10% of the shares would push up debt to 200% of equity."
Can you post the maths on that and an explanation please? Because i have no idea what you're saying.
"Some would rather see BT cut the dividend altogether, halt investment in the fibre network build and instead undercut the competition to take market share. "
That would be a bad move on many levels. OFCOM's primary objective is to promote competition and protect consumers. If BT did what you suggest, OFCOM would just level the playing field under pricing controls and the money would just go up in smoke and BT wouldn't get to beat the competition on Fibre coverage. The incentive for BT to build out FTTP, is that OFCOM are loosening regulation on that product and BT want looser regulation. BT have to walk a tightrope, but they're doing what they need to do in my opinion.
Fleccy,
"Of course a mere whiff of buybacks and the market would soon hike the price right up." If you would be remotely right then why the hell is BT not following that strategy. The reason why they aren't is because they can not. Buying back 10% of the shares would push up debt to 200% of equity.
@Fleccy,
Some would rather see BT cut the dividend altogether, halt investment in the fibre network build and instead undercut the competition to take market share. If BT did this the likes of Talk Talk etc would likely go bust as they only survive because they are the cheapest. BT could use the billions they are saving to eradicate the pension deficit in a couple of years. This type of big bully strategy would probably sit well with the market. I think BT are on the right track but they now need to be making it clear to OFCOM that its no more Mr Nice guy.
"I somehow think that the banks would be rather reluctant to provide any more money."
To answer that point, if they diverted the £1.5 billion dividend payout instead of paying dividends, that amount of stock available for trading would rapidly dry up. It's easy for BT to push the share price higher if they wish too and with less 10 billion shares, they could reduce the shares by nearly a billion a year at the current price. Of course a mere whiff of buybacks and the market would soon hike the price right up.
"With BT's debt now probably around £20 billion I somehow think that the banks would be rather reluctant to provide any more money."
A big chunk if the debt is due to lease liabilities under IFRS16 reporting rules, BT didn't, all of a sudden, take on another £6 billion in debt in 2018. I think i'll be ok in 5 years on my investments, i just think you'll be in the same place.
None of our opinions have any bearing on the share price. Its just a forum where one expresses their particular view. Just because I was convinced when the share price was at 250 that BT was overpriced and a very strong sell does not mean that I believe the share price will keep on falling for ever. Yes Fleccy BT has a bottom but the million dollar question is where that bottom is. It is quite obvious it was not at 250. In regards to borrowing money for share buybacks. With BT's debt now probably around £20 billion I somehow think that the banks would be rather reluctant to provide any more money.
Good post Pete, nail on the head there. It is strange people think what they post here makes a difference to SP. Haho.
"I come here to hear your words of wisdom. Be honest in hindsight should you not have listened to me and Lamtree. Are you just having a go at me because I have shown you up as being a lousy investor. Are you still convinced that BT,s profit will be above £2 billion?. WATCH THIS SPACE!!!!"
Bluepete is correct, you don't come on here for words of wisdom, you post on here to present a negative view and a few, not many, will possibly sell out on your advice. You keep pushing the view that BT will continually fall and it may yet fall further, but I would suggest there's a limit and the bottom can't be too far away. Last time I looked at the list of the UK's most shorted companies, BT wasn't even on it, so the guys who bet against shares dropping don't share your view. Another thing to consider, say BT did drop to £1, that would value the company at less than £10 billion, why wouldn't BT just stop the dividend divert the money into share buybacks, or do like US companies do and borrow money to buyback shares?
At some point the market will do a reversal on BT and UK focused stocks in general, I'll just wait for that event.
You don’t come here for anyone’s words of wisdom Avro. Your motivation is to spread negativity and to try to convince that you’re cleverer than others. LT is here for the same reason and with the same obsessive compulsion. It’s a very unattractive personality trait and suggests a high level of insecurity.
The most perverse thing is that if you do really hold shares in this company, and if you do decide to purchase here when there are so many other places you could go, you will only get any personal satisfaction from having done so if they then fall further.
BluePete,
I come here to hear your words of wisdom. Be honest in hindsight should you not have listened to me and Lamtree. Are you just having a go at me because I have shown you up as being a lousy investor. Are you still convinced that BT,s profit will be above £2 billion?. WATCH THIS SPACE!!!!
Definition of lunacy...”BT has been my worst investment by far. However I am also thinking of buying at £1.40...”.
There are so many other places you can go and play why ever would you keep coming back here?
BoBetts,
BT has been my worst investment by far. However I am also thinking of buying in at 140 though I got burnt by making a small investment at 174.4. Having said that I think there are much more attractive opportunities out there then BT.
Velo,
Thanks for that.
If we will come in at anything less then 2 billion it will not bode well for the long term.