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Morning All,
As we all know, its the debt in VOD is pretty chunky so is the fact that interest rates are more likely than not to start rising in the next few months, so making servicing that debt more expensive , the reason for the drop to sub 110? I have held these since pre Verizon days and its just gutting to see the state of the firm now, not to mention the horrible red number in my portfolio. Beginning to think of bailing and taking the hit - there are just so many other opportunities i could use the cash in. Whilst the divi is good, its not great if your capital is being eroded at the same time... Maybe time to bite the bullet...GLA
Your decision, of course, but div is not far off and price likely to recover well in the interim. Affected by BT and comms generally. Interest rates will not be rising substantially. The governments of the world have a lot more debt to rollover than VOD.
Vodafone is reducing debt everyday when they purchase Vodafone shares for treasury, as all share purchase would be used to pay back convertible bond debts.
Most important is that, Vodafone do not need to purchase Vodafone shares, as, when they would need to retire convertible bonds, they can issue new shares.
Vodafone purchasing shares from open market shows that company is not worried about debt, because if they were worried about debt, instead of buying shares for treasury to retire convertible bonds, company would have retired convertible bonds with new shares and cash company is using to buy shares, they would have used it to pay debts that they could not repay (or retire) using treasury shares.
Company not worried about debt means, company knows they are having enough revenue that they can buy shares to retire convertible bonds, instead of not spending cash to buy shares but relying on issuing new shares for retiring convertible bonds
Company knows that financial condition better than outsiders, so, if company is not worried, why anyone else is getting worried?
Wiscos - You make a good point re the divi, but I hate to think what may happen to the SP once it goes Ex. Like i say divi is all well and good but not at the expense of more of my capital. For me there needs to be some growth and I am not sure I see that element.
Umeed - Interesting perspective, but does mean we are reliant on VOD deciding if its got a debt problem or not. Might that not be the same as asking a gambler if he has a gambling problem? Not sure it (or any co) can self police that well?
Good weekend all and fingers crossed for a better week next week!
There is no liquidity issue imo. With good commercial and cash control, Vod can pay a sustainable dividend.
Vod have a 'strong liquidity profile with 10 year average debt tenure'
Net cash position = €9.8 billion
Unused facilities = €7.4 billion
Maintaining target of 2.5-3.0x leverage
No short-term refinancing requirements
Mandatory convertible bond maturing in March 2022
https://investors.vodafone.com/debt-investors/financing-strategy
' no liquidity issue'
Looking at the debt profile, there is no near term impact from a 'speculative' rise in interest rates in December or this or next FY.
Assuming inflation concerns go away, interest rates might not rise anyway. Even if interest rates do rise, Vod model is not exposed like it was 5 or 10 years ago.
Governments dont want to tip their economies into recession by raising interest rates. Consumers cant afford a rise in interest rates.
Agree with that but would like to see Vodafone paying off debt for a few years and forget the dividend for a while.
Agreed.
While they are hitting their leverage target 2.5 to 3.0 times ebitda, they are not far off blowing them away if they cut the dividend.
On balance, Vod are capable of turning up €1 or €2Bn cash from their global footprint just tipping out the lockers..so the dividend probably sticks for a while yet
Yes... I meant that it might be better to wait a while before you sell (if you decide to do that). Selling before xd would obviously be necessary although at this share price and with the share buyback and general inflation which will increase revenues (comms prices will rise after the energy inflation - not by an much but it will come), I don't see it dropping much more (and if it does it's a buy for me).
agreed. The rise in NI tax effectively will put a break on thinks. An interest rate ontop of that would be suicide for the Cons
Got out this morning first thing after a weekend of thinking, and took the loss. Can't win them all, ... I would get back in, but Lord knows at what price. I can't really think this will go below £1 with the divi etc, but if it saw 105 I wouldn't be shocked. If they do cut the divi to concentrate on debt then it's pick your price time I think. Good luck to you all.
@Devtrad Good luck to you!
I am not so lucky, every time I sell and wait to buy back cheaper, but end up buying back on higher prices than sold. So I will stay put and buy more at 105, 100p if it goes there.
@traderuk Thanks and know the feeling, same happened to me on RDSB! I think the boards are full of tales of the ones that got away/didn't go to plan at the moment. Had to stop myself a couple of times with buys that were more gambles than actual investments.
@Devtrad
Ha, I am on RDSB too, more than enough to make up the loss on VOD fortunately!