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'Telecom providers are better equipped to raise prices than Airlines, look at the recent CPI plus 3.9% price rises'
I guess it different in each 'market' and the timing of any effect is different as each regulator in each market drives for a 'common' agreed definition of cost, ie a WTO definition.
For example, rather than raise prices in India, fierce competition on price has resulted in the Gov taking an investment position to facilitate a new ownership structure. In the end, there is no such thing as 'free' as someone has to pay for it.
So its inevitable there will be 'inefficiencies' in SP pricing. On the other side, the regulator wont allow an inefficient operator to pass on costs to the consumer (citizen) and simply lowering costs to avoid losses ultimately results in an operator exiting a market while more efficient operators will realise profits over regulated prices by investing and or innovating. As a consequence, gains in productive efficiency put pressure on final service prices (and contribute to end user welfare).
I guess if VOD is entering a period of low/ less intense capital reinvestment, then it must look to innovation to grow profits. I suspect the answer is some mix of both investment and innovation on a glide path to lower long run incremental costs... as VOD says in its strategy 'Vodafone is strongly positioned and through 'increased investment', we are taking action now to ensure we play a leadership role and capture the opportunities that these changes create.'
https://investors.vodafone.com/about-us/our-purpose-and-strategy
nobleo, sorry typo, I meant robleo. You are pottery in motion, Upwards though would be better than round & round? Except if you are in the film ghost of course? Then both !!??
Poetry i. Meant, duh
Nice one fleccy, you outdid dan with the potry there, Dan your up next lol
"let's just hope Putin, doesn't put the bootin & spoil the party?"
I can't help but think that routin-tootin Putin won't put the bootin, as the result of lootin & shootin would lead to the World reputin Putin as an imputin warmonger; Plus it would hit him and his mates in their most sensitive area, their wallets.
"The discounted cashflow models they use try to express the time value of money in todays terms and so make estimates about future interest rates, inflation, growth, scientific improvements etc. "
Actually, Telecom providers are better equiped to raise prices than Airlines, look at the recent CPI plus 3.9% price rises.
https://www.which.co.uk/news/2022/01/broadband-annual-price-rises-which-providers-will-hike-costs-the-most-in-2022/
Of course much depends on competition, and Telecom companies will allow customers onto new offers at the end of their current contract. I have a TV & Broadband contract with Sky, and my monthly bill was due to go up to £70 per month at the end of my then contract; I asked for a new contract and now pay £42 a month, for more or less the same service, at least I don't notice the differences.
There are no guarantees Air travel will resume as normal in the long term, businesses may decide to do more via Video Conferencing, and although Tourism Air Travel may see a boost from the lifting of restricions, and current low fares, the enthusiasm may decline as pricing normalises. Telecom services just tick over month after month, with the revenue clocking up with minimal intervention, and mostly guaranteed. Whereas Air Travel might be viewed as a luxury, internet & phone services are a necessity in this age of online banking, shopping, etc, etc.
Some will say i'm biased, due to my background and investments, but no matter how I try and view it, I see Telecoms as a much safer bet than Airlines.
Android. Betfred winner. It wont take him long before he looses the whole lot back, right down to his last 3p... The reason bookies make so much money is because of the gamblers who think they know better than the rest. Without them, the bookies would be out of business. Still good luck, I like a bet myself of course. Vod still on a great run, let's just hope Putin, doesn't put the bootin & spoil the party?
Fleccy, Compound, thanks for very thoughtful structured posts.
The only thing front of my mind why there are inefficiencies in pricing and in particular, the airline industry vs telecoms is methodology. For example, where analysts attribute higher value to £1 receivable in time 1 vs £1 receivable in time 20. The discounted cashflow models they use try to express the time value of money in todays terms and so make estimates about future interest rates, inflation, growth, scientific improvements etc. I suspect the recovery from the pandemic changed some of their assumptions about cash receivable in time 1 where airlines quickly ratchet up whilst telcos have broadly annuitised their returns in line with regulatory controls over a longer regulated time period.
Even with low telco capital reinvestment cycles, the regulator probably would not allow higher returns in time 20 and regulate they are passed on to consumers (citizens) in lower regulated tariffs. I guess a telco could crystallise some of that future value before it is regulated by restructuring now, hence the current bid/ M&A excitement.
"You just need to look for inefficiencies in pricing in both and consistently put your money into those opportunities with a disciplined approach to position size, profit taking and risk management."
Wise words Compound; I always read your posts with interest, and haven't found disagreement with anything you've stated in any of them.
Much depends on investment window, as retail investors we should think in terms of years, not days and months. The professionals need to consistently show profits year on year, so they're time limited on holding paper losses.
Because Covid is so recent, it gives some brilliant examples of irrational pricing between sectors during the pandemic; For example, why were Telecom stocks severely affected along with Airline stocks, and why did some Airline stocks actually outperform Telecom stocks?
https://www.google.com/finance/quote/VOD:LON?sa=X&ved=2ahUKEwj1yduf8fn1AhXDlFwKHcveB8AQ_AUoAXoECAIQAw&window=5Y&comparison=ETR%3ARY4C%2CLON%3ABT.A
The market decided to re-rate Telecom stocks downards, years ago, using competition, and constant cycles of investment into new tech with no return on the investment, as the excuses. I always like to use Ryanair as a comparison to my Telecom holdings, since it's easy to see the differences in market sentiment, and pricing. Ryanair doesn't pay a dividend, so investors are completely dependant on capital gains, with profit/loss entirely determined by when you buy, or sell. On the 5 year chart, linked above, the declines in Vodafone and BT are easy to see, but what's really surprising is the difference in performance during Covid, where Ryanair price outperformed Vodafone by more than 55%, and BT's by even more, which is especially surprising with BT and Vodafone still making profit, whereas Ryanair has lost Billions. The competition and constant investment in new Tech arguments, doesn't just apply to the Telecom sector. Because of concerns around ESG, the Airline industry is under the carbon emission cosh, facing big investment in new planes and carbon offseting. Competion is also a concern for Airlines, with many Airlines competing for the same routes, and Governments in Europe discussing alternatives like high speed train. Why is so much made of the infrastructure investment cycles, in respect of Telecoms, yet no mention of the investment in new planes required by the Airline industry?
My career has been in Telecoms, and I've seen the upgrade cycles and investment in new Network Tech, like the moves from PDH to SDH, and more recently to DWDM and Cloud. I totally disagree with the market argument that Telecoms will constantly require ongoing upgrade cycles, just to stand still. Once the FTTP and 5G upgrades are completed, I don't see any further network evolution for generations. FTTP has enough bandwidth capability to serve everyone's needs, and 5/6G will be more about cell density and coverage, with 6G just being an extension of 5G, not a replacement.
Hi Rovernut,
Okay, I'll have to take your word for it regarding the exact price at which you bought, and as you can see there has now been lengthy discussion here about the effects of consolidations etc since the "good old days". The simple point is that you bought at a very much higher price than the price today, and you're now sadly very much "under water". My sympathies about that. My current holding is also still significantly below the average acquisition cost, but to nothing like the same extent as yours.
All the best,
Mike.
"Rovernut,
Are you on the right share? When was it 280? I've been involved with Vodafone shares on and off for nearly 20 years, and I certainly don't remember it being anywhere near 280. I think the highest was just after it sold its part of Verizon, and that would only be in the low 200s."
Unfortunately yes Mike. It was 320 in June 2000, and I've followed it all the way down.??
Daniel - of course it’s possible to beat both the markets and the bookies. You just need to look for inefficiencies in pricing in both and consistently put your money into those opportunities with a disciplined approach to position size, profit taking and risk management.
Lots of people can make the ‘right call’ but without those last 3 things they eventually end up losing money.
Spot on Mikey, if Putin does invade we’ll see a 20% drop or more across the board.
Mikey you are a clown
'Good luck though if you think you can beat the market & the bookies?'
Maybe. Saw this today. Says his 'ambition is to skin Betfred for a million.'
https://metro.co.uk/2022/02/09/nottinghamshire-pensioner-wins-2686-from-3p-bet-16079187/
Well it looks as though Russia is going to be the reason for market declines looking at America today . Seems they think the invasion is imminent .
Android. Good luck with that, but you are just gambling whether vod goes up or down, so you will probably lose in the long run. Good luck though if you think you can beat the market & the bookies?
I see what you've done there dan, it will be a double win, if it hits the highest price, best of luck, Mikey will be very smug if he wins again
Hi Dan,' So what you mean by top slicing?'
Locking in some gains on VOD purchases and leaving the balance to ride any volatility. I sometimes use leveraged long or short products to balance my risk and stop fiddling with my stockholdings! Today was a day not to fiddle with the VOD holding imo, hence not selling.
Well, I can't have that, so I will go 1.43 as well? A tie doesn't count? Only joking? So I will go 1.44. Would I cheat?
Gary.. Yomping in the hills eh? You should try skiing in the sunshine, far better, but more risky perhaps? Have a good weekend.
On reflection I think Cevion & any other activist investors would be glad vod turned down the bid. Cevion, & the vod B.O.D. want mergers & cost saving co operation, not the sale of a big chunk of vodafone. What would vod do with £12 billion. If they pay of deb't, can they save more in interest on the £12billion than they can make in profits from the Italian vodafone? Probably not? Vod want to increase profits, whilst gradually paying down deb't, & am pretty sure that is not only the plan of the activist investors, but also Nick Read as his band of merry men!
142 for me, Dan leave this be a lesson to you, cheating doesn't Pay lol
Dan I really posted this in order to assist anyone newish to the game reading the comments, it helps I think to sometimes temper enthusiasm with a bit of realism. I have recently read quite a few posts here & on ADVFN of people with supposedly large holdings & little or no diversification whatsoever.
Talking about realism I have I read Mikey correctly or am I dreaming?
Have a good weekend Dan & all, I shall be yomping through the Quantock Hills, possibly in the rain!!
Hello Gary. I think most people on this forum would agree with your low risk advise, so I am baffled as to why you think most on here don't diversify, why do you think that? I get the impression that most on here do diversify. Anyway good luck.