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"Gigabit internet is currently only needed by business and fan boys."
I'm no expert, far from it, but will Gigabit internet be needed?
I would think that the vast majority of general public won't need it, they may want it because it's available, but will they really need it?
Aus. Look at the filing page, company dormant since April 2013, the name still existed but has not traded under that name since April 2013. Everything was transferred to Voda during that year. It’s all there.
"Fleccy - I’m not talking about anything more complicated than counting. Increased profit margin (awaiting delivery, may not happen) on lower revenue means less overall against more dept."
Without a crystal ball, all we can do is guess where things will be in 5, or 10 years.
This narrative, writing off BT as a spent force in UK telecoms, doesn't take history into account. No matter what OFCOM do to regulate BT seems to backfire over time. As an example, OFCOM force Openreach to hold wholesale prices down, which allows companies like Talk Talk and ZEN to compete directly on a level playing field with BT. By holding prices down on Openreach, OFCOM are damaging investment for altnet providers and even Virgin Media by holding their prices down. It's a funny old game telecoms, history suggests that it would be foolish to write off BT. Obviously Gigabit internet will be required at some point, but i'm currently very happy with my FTTC service. Gigabit internet is currently only needed by business and fan boys.
Fleccy - https://beta.companieshouse.gov.uk/company/03840884
"Aus. Thanks for crediting me for Fleccys clarification of C&W"
Aus said "NDN - C&W U.K. stopped existing in 2018."
Actually Vodafone completed the acquisition of Cable & Wireless Worldwide in July 2012 and integrated it into the Vodafone business on 1 April 2013.
CWC was taken over by Liberty Global in 2016, but that was the Caribbean.
Sorry NDN apologies
Fleccy - I’m not talking about anything more complicated than counting. Increased profit margin (awaiting delivery, may not happen) on lower revenue means less overall against more dept.
It’s pretty simple maths, halve revenue but increase margin & dept doesn’t necessarily work out as more profit.
Aus. Thanks for crediting me for Fleccys clarification of C&W history. Coax, yes you can send different signals down it simultaneously. The problem is the electrical characteristics , the higher the frequency the more power needed to go along a given length, interaction between signals interference from upper and lower side bands needs consideration, crosstalk within a multi core cable ( same problem for twisted pair ) coax signals are very prone to having the correct termination impedance in place, if you are sending more than one frequency then the impedance will be good for one signal but impact negatively on others reducing power transfer or causing signal reflection back down the cable which can cause other problems.
Fibre, stick multiple wavelengths down the same price of glass simultaneously, no need to compensate for power losses, no interaction with other wavelengths, no interaction with other fibres in a multi cable, no need for the correct termination impedance and it’s inherent issues and the ability to send many many more separate signals at the same time with very high data rates for each one. Just pick off the wavelengths you want at the end.
Bit like comparing 405 line analog TV signal with Freeview digital.
Like you previously said Aus, we're just going around in circles. There's nothing I can say to you, that'll allow you to see the potential future profits generated by BT/EE/OPENREACH. BT doesn't really need any other services, it just needs to leverage it's network infrastructure and generate enough net profit to pay down its debt, service its pension obligations and give shareholders a decent dividend return. As Openreach is a regulated entity, OFCOM have to take all this into account when they set pricing levels. At some point, OFCOM will have ease back with the regulatory pressure and let the competition stand on their own feet. In 10 years from now many telecoms companies will be pushed out, BT wont be one of them. In the end there are likely to be three, or four big players. The Virgin/O2 tie up is more risky than BT, due to the £18 Billion debt at start up and the £10 Billion they're planning to borrow for infrastructure spend. Another problem for Virgin is Sky, which is likely to use Openreach infrastructure and directly compete with Virgin on content. It might be a good thing for BT to concentrate on its strength as a network provider with triple or quad play offerings, BT might even partner up with Sky to offer content, who knows what the future holds?
"(RF)frequencies, I believe cable companies broadcast tv, 1gbt broadband and voice across theirs."
Adding extra light wavelengths is much easier that adapting a coaxial based system to carry different services. Fibre can carry Terrabits of information, with more upgrade flexibility. BT will have to pay for it now, profits will come later. I suspect new services are on the drawing board that we haven't even thought of yet and FTTP/5G will make them possible.
NDN - C&W U.K. stopped existing in 2018. The services & networks it owned are still there, just incorporated in Vodafone now. I’m referring to this capability as C&W. Rather than Vodafone as in mobile. Correct me if I’m wrong, but coax is not limited to one service, there can transport multiple services not separated by different light colours (wavelengths ) but by different em (RF)frequencies, I believe cable companies broadcast tv, 1gbt broadband and voice across theirs.
Almost lastly, on this date I think virgin have more FFTP then BT does. Or at least it’s a close run thing
Lastly, I’m not portraying the BT network as worthless, I’m portraying it as not able to generate enough money to equal what it does now or 5 years ago when generating revenue from network activities + all its business and consumer retail revenue & that this retail revenue needs to be replaced with something else
"Thing is BT is the ocean they all need to get by. The ocean doesn’t need to create its own fish to get by because it’s the ocean."
Totally agree, there's a reason OFCOM categorise BT as a Significant Market Power and the FTTP rollout will ensure that's how they'll remain. I do believe though that Openreach will eventually be IPO'd, but as I said in the previous post it will likely be after 2025.
The more fish there are in the sea, the more they will eat each other. So they all manage to just about get by, some do better than others for a while, then they come up against a more aggressive fish and sometimes there day is done. And so it continues. Thing is BT is the ocean they all need to get by. The ocean doesn’t need to create its own fish to get by because it’s the ocean.
"Even the revenue from emergency services is in decline, I know for example C&W have taken some of this business."
You do realise that C&WW ceased to be an entity in 2012, when Vodafone took them over. What your talking about is Airwave. Airwave was actually spun off from BT and subsequently became a part of O2. Airwave leased circuits from both BT and C&W and you're correct that C&W did supply quite a lot of Airwave connectivity way back, but so did BT. Airwave was acquired by Motorola in 2016 and like all businesses, they will lease capacity from whoever can supply it at the cheapest cost.
I've actually tested 2 megabit circuits on Airwave, maybe 15 years ago and even then it was run separately from BT, with its own secure areas within the BT Exchanges.
Aus the picture you're painting is of a worthless network with thin margins, but you're over simplifying it. Customers pay big bucks for direct connectivity and BT do offer other services beside just network. IOT will open up new revenue streams too which will offer some growth opportunities.
Think of Openreach as the telecom equivalent of National Grid. National Grid has a P/E around 25, more debt than BT and has a much higher valuation. BT have stated £2 Billion annual savings by 2025, that adds to the bottom line or adds to the investment potential. Once 5G and FTTP is completed, there's nowhere left to go, the networks literally print money, day in day out and adding capacity is easy and cheap with DWDM. Telecom networks are needed more than Facebook, you can do without one, but not the other
To finish, Openreach are rolling out FTTP at a rate of knots and the new fibre connections are far more versatile than the coaxial connections used by Virgin media. I pointed out, in a previous post, that Fibre can be used to supply multiple services down any connection. You could literally turn a house into a 5g micro cell using a separate wavelength without any interaction whatsoever with the home broadband connection. That probably wont happen, but it's possible with Fibre and the home owners permission, some might agree to it for an annual fee. I'm in no doubt that BT will eventually completely spin off Openreach, but only once the pension issues are resolved and they're sure of getting the best price, most likely after 2025.
Telecoms are essential and have a bright future in my opinion.
NDN - FLECCY - We go round and round in circles again and again. I already know all these services need network of 1 kind or another. What I’m saying is BT’s service business is showing declining revenue because people either don’t want to use their service or because others also provide a service so they have a choice & BT needs to find services people do want to spend their money on. Increasingly I see network as the thin end of the wedge. People / companies will have other options (that’s just a fact). Even if those companies still rely on a bit of BT network, the conversation from retail to a tiny bit of wholesale income doesn’t work out well for BT’s bottom line. BT has to spend £20bln on upgrading it, this has to be clawed back. Owning the network but not the service is the thin end of the wedge, because retail generates more money than the wholesale. Slowly converting customers from retail and on the Bt network to wholesale but on the network or worse 1 wholesale charge for lots of old Bt retail customers (no more). I’ve heard your same old same old which entirely ignores this risk with Obfuscations about less maintenance costs or future proofness or that no matter what other companies have to use BT tails (which I still don’t accept & I know for a fact not to be true) but everything you say, just adds up to a diminished BT unless they can find things retail customers will pay them directly for, like BT sport for instance. If BT ends up wholesaling it’s network to resellers or over the top tv and service companies, it will end up being a fraction of its current self & maybe unable to service all that debt it needs to upgrade. Those are my thoughts, this is what I ponder & I don’t see any sensible answer yet. Even the revenue from emergency services is in decline, I know for example C&W have taken some of this business. This is why imo wholesale network isn’t enough
Aus. So how do you think digital TV, DAB radio content gets from the provider to the transmission sites, how is the same done for Airwaves the emergency services radio system, FM radio content, broadcast linked from sports locations, Houses of Parliament, Downing Street and many other locations get to your TV. Yes that’s right, the BT network.
"My opinion is being the provider of network isn’t enough, it needs things people will spend money on."
Telecoms companies don't provide network for nothing, companies like Netflix, Amazon, Facebook, etc have to lease network capacity to guarantee quality of service. As an example, Netflix will die a death if connections are lagging and screen freezes occur frequently. Netflix needs to ensure that enough bandwidth is available at their content servers and ISP interconnections even with net neutrality.
The risk for content providers is that net neutrality rules could be relaxed in the future, with content providers having to compensate ISP's even more. I'm not saying that will happen, but it's a possibility.
Hey Carrington - I agree in part, I see these shares as under valued too. For BT I think it needs to prove it can protect itself in a changing market. I think the jury is still out on that. My opinion is being the provider of network isn’t enough, it needs things people will spend money on. I still agree with the attempt to get into tv for example, BT sport I think is good but the “tv” offering still feels a bit half hearted. I like to send them getting into branded smart homes, but the ship I think has sailed. So that leaves questions about what will it be.? I have most of my money in this stock so my money is where my mouth is too, but changing work patterns, broadband competition, death of home phones etc etc etc are all leaving me concerned. I would have loved to see BT do a deal with Apple TV for instance to replace their set top box. Have to see.
Hi Aus - plenty of reasons NOT to buy the market atm - Brexit, Coronovirus et al - I take the opposite view - I think Brexit is a done deal (plenty going wrong in the EU right now without adding to it with a no deal) death tolls gradually reducing as vaccines are found and distributed - all in all UK blue chip stocks are massively undervalued compared to stocks in other markets - I think we will see these stocks re rated - I could be wrong of course but that is my bet and I am prepared to put my money where my mouth is
gla dyor etc
Hey Carrington - based on low interest rates and low stock values I guess. Liberty (John malone) has never been shy about doing deals, mergers and acquisitions though, so much so this looks a bit like BAU to me. Although you’re proved more right than me by an increasing SP across this sector. Could also be a safer place for the coming doom. Unlike you I didn’t buy at 99p. Silly really, I was busy, hum Ed and harrrrrr’d but kept the money in my pocket..... it’s nice to see BT out performing Vodafone shares for a change too, but they have just paid dividends
"only way to grow now is takeovers and mergers"
The markets appear dysfunctional. The US is pushing toward record highs, UK focused stocks are in a Bear market and the market seems oblivious to valuations around FANG stocks. As highlighted in my TESLA post, stock splits aimed at bringing in more retail seems to be the latest thing to keep that bubble inflated. I haven't studied the forward earnings estimates for the likes of TESLA and Amazon, but they must be incredibly high and probably unachievable.
I think it just highlights telecoms companies that are ripe for the plucking at low prices - that in itself highlights BT VOD etc - I think also there is a sea change a coming - fund managers have milked the fangs expansion for all it is worth - time to consolidate now and look for value - I topped my BT holding up at 99 pence and this now forms around 15pct of my portfolio so I am pretty confident in BT going forward - only way to grow now is takeovers and mergers - that is the way its going to go for sure - Liberty today is just the start
dyor etc
Why would liberty buying assets in Europe create interest in U.K.? Might be Liberty spending in Europe might mean they are less likely to spend more than O2 buy in the U.K. ? . If that’s the theory not sure it’s correct because Liberty are not necessarily unhappy piling on debt
Thanks EMM. that probably explains it. BT seemed fast out of the traps, with Vodafone slow to follow, seemed company specific at first glance. No doubt the climb will be be short lived, but watching BT spike and then get pushed back down is something i'm used to. I don't see BT reaching fair value until the market power players take their foot off BT's neck, but i'm patient and willing to wait for however long it takes.
https://theloadstar.com/rtr-liberty-global-launches-7-4bn-takeover-for-sunrise/
Bid not but