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PPS, To the below post.
- Despite the good news of OPERATING Cashflow (not to be confused with FCF (Free Cashflow) being more than sufficient to meet debt repayments for both VOD AND BT - Both have terrible liquidity ratios. Terrible!
Now that does confuse the hell out of me! Tsk! How can that be?
Must be Schrodinger's Cat syndrome and all that :)
- F'king financial accountants and their above-the-line and below-the-line stuff
Hi Mulder,
Yes, hadn’t compared to others so until you pointed it out, I didn’t realise VOD had the more manageable “NET” Debt ratio; so thanks for highlighting that fact.
However . . .
- must take issue with the wildly incorrect (IMO) BT ratio; so have to ask what data supplier are you using for your debt metrics?
Or is it I, that has it all incorrect?
Is it the Morning Star website you use or somesuch (as you include a couple of US stocks for comparison?)
I used another data supplier besides my expensive subscription package data supplier and both have nowhere near the poor result you lay at BT’s door.
In fact I see quite a difference to VOD’s that you show, but your overall assertion seems to hold that VOD is the best debtor ratio of a bad bunch of debtors, so to speak. : )
Didn’t bother with the US stocks after finding BT wildly inaccurate (so inaccurate I expect you’ll be hearing from Fleccy :)
Firstly, you have to compare like with like.
And Net debt to equity can only be reasonably accepted if the very latest trading results are used. I very much doubt they all have the same H1 dates although BT’s dates are pretty close to VOD’s.
Secondly, which debt metrics did you use because they all differ vastly.
1) Did you use Long Term Debt?
- or did you include Capital Lease Obligations which can massively increase the amount to give the -
2) TOTAL Long Term Debt?
- Or more confusingly the
3) Total Debt which is higher than any of the above? ( €70B for last full year! )
[One more post coming on the weekend on that amount).
When in my view, the more pertinent debt is –
4) The NET Debt?
I see VOD as 109.44% ie., 1.09
Which is a much better performance than your 1.7
BT which you show as a terrible 3.3 I have as 130.31% ie., 1.30
So yes, VOD is still the better net debt to equity participant– but both stocks are much higher than the generally accepted 50% debt leverage point, beyond which red flags are raised on both stocks.
So both draw criticisms but BT’s red line crosses is deemed the more guilty player.
The main take-away is that despite VOD’s large net debt it is still well covered by Operating Cash Flow.
Please don’t think I know more than this post suggests. I don’t.
(I have access to data subscription packages that give me a helping hand).
PS.
Like VOD, BT’s Operating Cashflow also easily covers debt repayments.
-------------
BUT I would still like to know how you arrive at such an horrendous Net Debt to equity ratio for BT, as it’s only a little worse than VOD’s ratio.
Hello Rob, I was going to say we should agree to disagree about Nick Read, but you beat me to it. Glad you got in at 91p but I thought you would have waited until later for the ex divi day fall you predicted? Obviously the sp doesn't always fall more than the divi on ex divi day as many have suggested, (up a net 1.8p today). It often has in the past, but it's the future that's counts. Talking of Mikey, last thing I heard he was in an Ex vodafone employee downhill ski race with Narcus. I think Mikey should win easily, as he is an expert on the subject!? Cheers rob, have a good weekend.
Thank you Mary for your explanation. "Not a day trader as a FC FTA. I am HTH" What the **** is that supposed to mean? Try speaking in plain English Please? You make absolutely no sense at all. But good luck trying, you may get there one day?
Knowing telecoms and both 3 and VOD I think this analysis is very valid. A merger of these 2 is a mutually brilliant idea. 3 struggles to scale and control its back office cost base, while VOD could use the extra market share and sector share.
Mulder, thanks for that analysis.
Looking at historic OECD data, Asia pac countries leverage mobile revenues off low debt to high income ratios while the Americas have low income to high debt ratios. UK is in the middle and slightly better than EU. It makes sense that Asia pac markets are generally less developed and less competitive than western markets so investment in infrastructure is lower.
10 years or so ago, the UK had the highest mobile revenue to debt ratio in the OECD and gave some of it up in an accelerated reduction in mobile termination rates in which 3 was the 'new entrant' agitator, drawing a line under long run incremental costs across EU and a tipping point to data economics and data network architectures....
In the end to end process we saw EE restructuring and many other examples of multi lateral reciprocation such as VOD increasing network investments in Germany. All of this was due to Globalisation (WTO, GATTS rules etc) and European alignment of policy interests giving us in the UK the local flavour of competition between firms ie the number of licensed mobile operators and consumer choice....
So in the current round of trade agreements, if our policy makers are any good, they will be callibrating for the comparative debt leverage ratios and, fingers crossed, allowing the market to consolidate.
For example, if Sunak and Hunt have their fingers on the pulse, they wont be throwing the baby out with the bathwater, and they will encourage the VOD 3UK consolidation as a catalyst for the next stage of regulated telecoms in the UK, Europe and Globally (eg China opening up again and India in particular because of its size) as part of coordinated trade policy agreements.
Vodafone wont be thrown to the wolves imo. In fact, with Reid promoting the principles of access to mobile internet as a human right, probably (as who else cares?) underpin the principles of free trade/ trade agreements and probably a return to WTO/OECD regulation using debt ratios relative to GDP for all the countries that VOD operates in.
So I still like the word 'resilient' in the face of the negotiations ahead. The current SP is a once in a lifetime bargain imo
Hi Dan, not sure we will ever agree on that point i made, but it doesn't matter, let's hope they can pull something out of the bag then and turn this around, doubled my number of shares here today at 91p which is almost half what i paid 6 years ago, more fool me perhaps, let's hope things will be looking better here in 2023 and at least we have Mikey on board wishing it up
best of luck
My brother is starting on here in a minute. Calls himself ToeRag. In olden days the very poor had to wrap their feet in rags. Hence Toe rag.
Where i live in Stroud the poor used to take buckets of urine to the cloth mill because they needed ammonia. Hence 'taking the p***' came about.
Anyone that bought yesterday for the dividend and held on today is approximately 1.5 p/share up in real terms. Not bad. Wish i bought some now.
Evanescent
In the North and can see S&G from back of house and Belfast Castle from the front. Used to have beautiful views of Belfast Lough before they were reclaimed, but at least the waft of the landfill gases has long since gone :)
Mulder - This is pretty interesting I would never have believed it especially BT ! Before I retired I was a telecoms infrastructure sales Director and we saw Vodafone as an eldorado customer along with BT also. Trouble was to do business with either hammered our margins !!
Trump45 - I agree with what you say but to drag the narrative back to AIM stocks it is very rare to be able to actually do a valid financial analysis so belief is actually all you do have, trouble is many people turn this 'belief' into confirmation bias or if they dont they fool others into their belief being fact for their own self interest !
MaryBr190.....same here....grandfather spent most of his working life at the yard. I grew up in Newtownbreda and loved the view of S&G as we reached the top of Cregagh Road when visiting grandparents....its a small world.
For what its worth I would not lose any sleep trying to convince doubters on your investing strategy....
Debt to equity
Vodafone 1.7
Verizon 3.4
BT 3.3
AT&T 2.1
DYOR.
That has surprised many I bet, the short sellers as well perhaps?
Not a day trader as a FT FCA. I am HTH when a position goes against me and average out of it if necessary. I do not realise any paper losses as most turn around - eventually.
The only position I went for with my heart was HARL ( I grew up looking at the cranes from the house) and was underwater as most were but I always maintained a £4 L-T target.
I assumed it likely to be a total loss and although my average was low, that position is now well in profit atm as I bought sub 6p and at 15p and 10p on the way down. A spike to 46p will see me reduce my holding to zero cost and then I will rebuy on any dips to build my position at an average cost sub 12p. I know how I do it and hope that makes a bit of sense though not a recommendation to anyone.
GLA
More chance of a takeover than BT for sure.
All this talk of debt is overblown.
Have you had a lot at the US telecom companies and the debt they carry? Verizon, AT&T? $200 billion debt
Vodafone has a better equity ratio and debt to equity than any listed telecom company for that matter.
Thank you Mary. I am a long term holder of vodafone & don't day trade as Most day traders lose money, partly due to dealing costs & stamp duty, unless you are spread betting, & then of course we all know that the bookmakers you are spread betting with don't lose. I would love to learn from you, but all I have learnt from you so far is that you are just guessing. But good luck with your so called method. Whatever it is.
5 was supposed to be % !
danielh - I posted my method many times, if you look through my history it is there forever.
In general a spike can be anything so for instance recently with Rank it went from 55p to 70p to 87p and then to 92-96 before it fell back. The spike could be a 5 or a (p) rise depending on the stock and depending on the stock and the quantity I hold.
I have holdings in the 30k 50k 80k and more quantities and if say LRE which moved from 461 to 580 and then to 614p before falling back, I certainly trim my position as it have travelled towards my target.
You never know the day and for MCRO I check the bid price within a few seconds via the RNS and sold out 100% that day.
What are your strategies? I am interested as to whether you day trade, buy and hold or how you trade. Never to old to learn from others.
I part sold into
"Not with 45 billion debt they wont thats more dent than some countries"
I seem to remember implying that Telecom companies maintain a high level of debt as a pseudo poison pill against takeovers, especially since the UK code on Takeovers and Mergers prohibits a target company, during an offer or when an offer is contemplated, from taking any action which might frustrate a takeover offer without the approval of its shareholders. -Since large institutional shareholders can build big stakes under the radar, like Drahi did with BT, institutions would likely vote against any poison pill defence, and make it difficult for a company to defend against a powerful institutionally backed hostile takeover. Having debt on the books allows the companies to have covenants in place, making takeovers difficult. All that said, Vodafone wouldn't have any national security protection like BT, so a cartel of private equity funds could feasibly make a play if they saw profit in breaking up the company.
Mary. Can you please define the following. A spike. An uptick. Sorry but they are totally meaningless. How big a spike? How big an uptick? One day you might make sense? In the meanwhile good luck with your spikey upticks. Anybody can post on here about making money, a bit pointless though, if you don't tell us how you do it. We are all dieing to know.
Evanescent. Thanks for your reply. But how do you know when to sell & when to buy. I don't have a strategy, because I don't do day/short term trading. What is your strategy please? Is it just guess work? Good luck though.
Fleccy. I am glad to see that you not keen on bitcoin. I have been very anti bitcoin for a long time now, (Totally corrupt) but try not to think about it. Some years ago I had a C.F.D. account with I.G. index & shorted bitcoin on 3 occasions, The 1st time I won, but next two I lost my nerve & bailed out at a loss, the last time I shorted at £5 to the dollar. I closed my I.G. account but after bitcoin had reached over $80k I tried to re open an account, but the rules for C.F.D. trading had become far more stringent, & they deemed I was not experienced enough to trade Bitcoin C.F.D.'s. I intended to short bitcoin when they fell to about $78K for about £5 to the dollar or even more. So I wish I persevered more in trying to re open my account, as at £5 to the dollar, if I had held that position until now, I would be up by about £300,000. So probably my biggest ever regret financially, but I probably would have lost a lot of sleep, as the bitcoin market is almost 24 hours & wild swings were common. The problem with bitcion is that although they are basically worthless, & always have been, the market was very manipulated & was unregulated so the (whales) (big holders) as they were called, sucked in more investors making the price rise & then in concert with each other sold large amounts at a profit before anybody else had time to sell. Anybody you thinks the stock market is manipulated, It is nothing compared to bitcoin. Many investors have lost a fortune, so It's eventual collapse will be a good thing because it will stop more suckers getting drawn in. It is a mathematical fact that there will always be more losers than winners who buy bitcoin. That is not true of the stock market, although of course you can lose on the stock market, most investors win. Ok, not me perhaps, but most. Perhaps my day win come?
Not with 45 billion debt they wont thats more dent than some countries
Sometimes it keeps on going down and down. Yikes.