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So the answer is to pay off the debt that needs to be repaid in the next couple of years then they don't need to borrow at higher rates.
Further to yesterday's posts, I've been taking a look at VOD's debt profile. the data is here if you are interested.
https://investors.vodafone.com/debt-investors/bonds-outstanding-eu-and-us
The good news is that much of it is at below , in some cases well below, the current rate of interest, and as VODs revenues are likely to be priced at around or above the rising interest rates , debt as a percentage of revenue should fall over the next few years.
The bad news is that some of the debt will need to be repaid or rolled over in the next couple of years and that will come at sharply higher rates of interest.
There is also the problem of exchange rates , VOD holds debt in sterling, euros , Japanese yen, and dollars, and the dollar-denominated stuff is going to create some pain if cable remains where it is (and I suspect it will or even fall).
So, what conclusions: VOD is going to be saddled with significant debts for some time and the only way of making major dents in that is to sell assets. VOD has a plethora of assets but the biggest are clearly in Germany, UK, and Italy. In the UK the proposed merger with three should reduce costs but won't return cash. So, Is Italy the next asset to be put up for sale?
Net asset Value, anyone know what the net asset value is of the business sold and what are the total assets of the business sold, and can anyone break down those assets like how much intangibles etc?
12:15pm: Vodafone sale a tick in the box but more to do
There has been a subdued reaction to Vodafone's sale of its Spanish business for up to €5 billion.
This may be partly because the sale had been well flagged with Zegona confirming talks were underway in September.
Russ Mould at AJ Bell feels it is "another tick in the box" for the company’s turnaround efforts but the journey is far from complete.
He pointed Vodafone "has lost its way in recent years and has been forced to review its business," which has led to asset sales and mergers with the intention of having a more streamlined platform from which to try and revive growth.
But he thinks the journey is far from complete and that Vodafone still needs to simplify its business, having suffered from being in too many markets with too little resource.
He suggested with the market shrugging off the Spanish news, that the telecoms group "needs to be more imaginative in reviving its fortunes otherwise its shares might continue to drift.”
Shares are down 0.2% at 76.56p while the FTSE 100 is up 36 points at 7,364.
Dave. "she never has anything good to say" Sounds like you mate! You need to cheer up.
I am not talking about asset value
You need to read the original post that I replied to
if the merge doesn't get approved and divs are canceled this will be a 50p share. say what you want about the value, she has ****ed this company for years, she was the cfo remember. she never has anything good to say. 78 i'm out.
You know that's not how it works right?
The current market value = assets - liabilities +/- market sentiment
The sale value agreed = asset value
We aren't getting 5b for asset value less the debt associated for that part of the business, we keep the debt element
Dave, As you say, the market hates vodafone, that is why the sp has done badly. She does not control the sp. Perhaps vod should have kept Nick Read, as clearly just changing the C.E.O. does not work!
Ok Ritchie, here's a few reasons why VOD's SP is sitting at a 20-year-low:
The markets it operates in are very mature. There is no real growth. Just a dog-eat-dog battle over market shares.
Mobile telephony has become like Gas, Leccy and Water; a utility. No customer cares who their supplier is, so long as supply is good and the price is cheap.
The European markets are over-supplied. Too many companies chasing not enough customers. Hence the market is rationalising through amalgamations.
Try looking at 'phones in the same way as the history of car manufacturers; Back in the 1920's there were literally hundreds in the US. Today there are just three. What took a century with cars, is taking less than thirty years with mobiles. Based on its' management's lack of success since 2003, it's highly unlikely that VOD will exist (except perhaps as someone else's brand name) in ten years.
Company Valuation is calculated including the debt which equals= £54b.
This is the figure the market is pricing Vodafone
well shes ****ed it since she took over. it was 95p and now we've had a low of 69.p under her. remember she was cfo for years, yep shes done great job. under her we will see mid 50s before a jump, wait for the div cut which will come nov 14th. the market hates vodafone.
Well said
Davef24. So what do you think she should do? Lie to all, & talk up the sp. Her job is not to talk up the sp. Her job is to run vodafone the best way she can, & be honest the shareholders.
Todays announcement means that VOD are selling a non core part of their business for c25% of the entire market cap of the company. Bonkers. I recall in the dot com boom shares trading on astronomically high p/e's and market scribes observed this was the new norm. Well it wasn't. Vodafones p/e today is 2.04!!!!!!!!!!!!!!!!!!!! (is that enough exclamation marks?) when we revert to mean - which the share price will eventually). The rerating could be sharp and long - heres hoping.
"Is she talking about the Spanish unit or the whole group? Is this comment a hint for Nov results?"
She's clearly referring to Spain for only. Read it context, i.e. as a follow up comment to the previous sentence in the rns.
Looks like a justification for the sale.
Its a good move i was in arrecife for a week earlier this year there is a vodafone shop in a busy new shopping center, with 3 staff and i only saw 1 customer in store when we passed daily. high overheads low income
Nice add to my holding this morning. Will review in 5 years.
Newsid... in reply to your query here is a copy of a post of mine re the tie-up with three, from May of this year which explains(I think) why Vod is trying to extricate itself from Spain and tie up with three in the uk. Those are the two "challenging markets "
Reposted from 4th may
"This long-awaited development seems finally upon us and there are a couple of points worth making. First I expect that the parties have been in touch with UK authorities and have tacit agreement that the deal will be approved, there may be conditions but essentially it will IMV, be approved in its current form.
Second an examination of VOD's last annual accounts for FY 22 show that its international revenues were : Germany 30%(of total revenues) margin43%, UK 13% margin21%, Italy11%, margin33%, Spain10%, margin23%.......(sorry for the formatting- I have tried formatting tables on this site before and they come out unintelligible)
However, I hope it is clear that VOD make decent margins in Germany and Italy and much less so in the UK and Spain.......guess why they are planning to rationalise the UK market to one less player!!!"
Shes an idiot, never talk up VOD
What did she mean by:
“However, the market has been challenging with structurally low returns."
Is she talking about the Spanish unit or the whole group? Is this comment a hint for Nov results?
So vague from the CEO
Added this morning at 76.2p
gla dyor etc
Jax bows your chance and 1946. Both know it alls, do this share open up or down and the finish please??? Before 7:59 x
Finally some good leadership actions on the way to simplification and increasing profits. Spain looses £300m per year and has little to no growth due to regulations. Very good Omen of what’s to come to return our SP to 200p plus where it should be. (Looking forward to a higher SP in the medium term).
Put me down for 79.5