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"The EPS has been consistently reducing between 2016 and 2020, which I guess goes some way to explaining why the share price has been in decline for the past few years."
Net profit's been reasonably stable though, disregarding the minor covid related drops. BT have stated that they're looking at £12 Billion infrastructure spend, but that is invested in the business and they're expecting an annual cost saving £1 Billion in 2023/24, with annual cost savings of £2 Billion per annum from 2025. The reason revenue's been dropping is due to the move to a wholesale ( utility) type business, which is thanks to OFCOM regulatory pressure.
Ultimately it comes down to what you want to believe, the vested interest market commentary constantly playing down the company, or the company projections mapping the move to a new operating model. Whatever happens in the next ten years BT will be OK in my opinion, they have huge scale in the UK market and will maintain their dominance. Some of the new upstarts wont survive, in my opinion.
Just asking because I've noted from some of your posts that you seem to be particularly knowledgeable on this stock, fleccy. I agree this one seems to be way undervalued given the profits and assets.
Would be interesting to understand what drove the meteoric rise from 100p to 500p between 2008 and 2015. The EPS has been consistently reducing between 2016 and 2020, which I guess goes some way to explaining why the share price has been in decline for the past few years.
"What’s your one year, two year and five year price target for this stock, fleccy?"
I haven't set any price targets, I've decided I'm going to keep holding until 2025. I did buy a chunk of BT at around 106p, with the intention of selling after Brexit and Covid are out of the way, but i'm now thinking about keeping them for the long term too.
I'd like to think that we might see a repeat of the climb after 2009, which came close to £5, but that would be a guess. I'm baffled as to why BT is as low as it is, it makes no sense to me. Because I don't understand why BT is getting hammered down, I choose to ignore it and will just wait for the price to recover over time.
What’s your one year, two year and five year price target for this stock, fleccy?
"The time was specified as 3-5 years.Again with this dinosaur board nothing gets done with any speed in mind.Roll on the takeover."
BT entered into a long term lease arrangement when they sold their property portfolio to Telereal Trillium, subject to BT leasebacks, with a minimum lease term of 30 years. "The contract arrangements included a flexibility regime that enabled BT to vacate properties over time so as to adapt to changing operational requirements."
http://www.telerealtrillium.com/about-us/case-studies/bt
BT are currently in the midst of the FTTP rollout and are reducing the number of offices and exchanges. Since Fibre doesn't have the limitations of copper and the GPON design allows transmission over 10's of KM, the number of exchanges are set to be reduced by two thirds.
https://www.egi.co.uk/news/bt-to-end-3700-telephone-exchange-leases/
All this takes time, but the savings will be significant for BT
BT are in no worse a position than they were a year ago when the SP was hovering around the £2 Mark.They have a cost cutting plan regarding their employees and limiting the number of working places.Three buildings only in Scotland will house the employees.The time was specified as 3-5 years.Again with this dinosaur board nothing gets done with any speed in mind.Roll on the takeover.
Next takeover rumour.....
Actually, don't say anything, but i've heard from 'a very good source' that Ant n Dec together with Irish pub band The Lepricorns are lining up a bid for EE....
Shhhhh......keep it quiet chaps.
M
Tonight on CNN when Trump is debating live going to announce where he will spend the money he has saved not paying tax
When is the next takeover rumour due?
Wow. So in the 8 days you have been a member you have managed 4 posts all the same message, think you need to get out a bit your brain keeps repeating itself it may need some new input to help it st st st stop.
Five years ago the BT share price stood at £4.96 and today they are a quid a throw - how the mighty are fallen.
Here’s the link
https://www.afr.com/chanticleer/nbn-co-s-worth-up-to-100b-20200921-p55xp8
22 times EBITDA. What’s BT? 3-4 times??!!
I’m also watching very closely what happens to the NBN in Australia. That’s nearly built and the gov there are anxious to flog it off. There are differences between the networks but even so the sale multiple will be used as a comparable for valuing Openreach’s FTTH network. Th
I
NBN Co's worth up to $100b
The firm suddenly looks the best asset a federal government could have when budget deficits are blowing out. Its latest corporate plan points to the business possibly repaying more than the money invested in it.
Sep 24, 2020 – 12.00am
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In the space of 24 hours, Communications Minister Paul Fletcher and NBN Co chief executive Stephen Rue have blown up three of the most commonly held beliefs about the government-owned wholesale broadband network.
First, there was a pervasive view that NBN Co would never make an adequate return on invested capital. It would be a white elephant that would remain in government ownership for decades.
Paul Fletcher says by 2023, 75 per cent of fixed-line premises will be able to order 1 gigabyte per second broadband. David Rowe
Second, there was a widespread perception that, at some stage over the next five years, the federal government would have to write down the value of NBN Co by billions of dollars.
Third, there was a widely-broadcast message that Australians would not have to pay high prices for super fast, fixed-line broadband.
All three of these beliefs can safely be consigned to the garbage bin.
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NBN Co’s 2021 corporate plan, released yesterday, forecasts the business will have earnings before interest, tax, depreciation and amortisation of $4.5 billion by June 2024 on the back of annual revenue of $6.2 billion.
The company will still lose $900 million in fiscal 2024, but it is clearly on track to earn a net profit in 2025.
NBN Co is an infrastructure business similar to companies with reliable cash flows – such as Transurban – which is valued about 29 times its 2021 estimated EBITDA by Macquarie Research. This reduces to 23 times in 2022 and 21 times in 2023 as conditions normalise post-COVID-19.
Another proxy for valuing NBN Co is Telstra’s NBN cash flows, which are paid by NBN Co to Telstra for use of its pits, ducts and pipes. These are valued by analysts at UBS using a multiple of 16.
Enterprise value
Using a blend of these valuation multiples it is not unreasonable to say NBN Co could have an enterprise value of about 22 times its $4.5 billion EBITDA, or $99 billion in 2025. Of course, enterprise value includes debt.
NBN Co says it will have about $27.5 billion in private debt by 2024 as it replaces its government borrowings with mo
"I agree, £3 will do me, that's not to say £5 won't be achievable"
Indeed, Brexit and Covid combined have a similar feel to the 2008/9 crisis and there's no reason to suppose that BT's share price wont take off once the downward pressure subsides. If there's a Brexit deal it will likely be a faster recovery, although I believe the same will happen in a No Deal scenario, but over a longer period of time.
Fleccy............ "My personal view, is that we'll see a rerun of the chart following the 2008/9 financial crisis, whether £5 is retested remains to be seen."
I agree, £3 will do me, that's not to say £5 won't be achievable, but I'm pretty confident that we will see a share price of £3 again.
"Price raised from £1.80 to £1.85 such is their confidence. I’d feel happier if I thought their original price of 1.80 was right."
It's irrelevant anyway. Once Brexit and Covid are done and dusted, that will lift the price and then the restart of the dividend, in the next financial year, will give BT another boost. In the absence of any bad news, the market will be compelled to rerate BT higher. My personal view, is that we'll see a rerun of the chart following the 2008/9 financial crisis, whether £5 is retested remains to be seen.
Price raised from £1.80 to £1.85 such is their confidence. I’d feel happier if I thought their original price of 1.80 was right.
"The market's got it wrong about BT profits, says Credit Suisse"
https://www.proactiveinvestors.co.uk/companies/news/930114/the-market-s-got-it-wrong-about-bt-profits-says-credit-suisse-930114.html