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A total of €4 b worth of buybacks intended. €2 b after the completion of sale of Vodafone Spain and a further €2 b after Vodafone Italy, according to today's RNS. Since there are 27,078,739,427 outstanding VOD shares according to the latest voting rights RNS, then this represents a total of 14.7717 euro cents per share worth of capital return. At current fx this equals to 12.623 GBX per share. At current SP of 68.8 GBX this represents only 18.347% of mcap. And the higher the SP the lower this figure gets! Am I missing something?
Best Regards ValueS
The buybacks an utter waste of time, I guarantee you share price will be sub 60 soon, dividend is being cut in half and if they wanted to return money to long suffering shareholders do it through a special, the buybacks will vaporise half this money and the other half will disappear into the debt mountain. Another dogshxt ftse 100 company on the worst index in the world.
Selling physical assets to free up cash, used to reduce debt and size of equity.
Reducing dividend to reflect future free cash flow.
Focusing in value add growth markets rather than building a physical asset empire seems reasonable to me.
I hope the growth materialises.
"I hope the growth materialises."
We all said that during the days of "Project Spring", remember! The days of delivering 4G then followed by 5G. And what happened, all the money from the sale of Verizone Wireless wasted and a huge mountain of dept appeared. No growth anywhere except in the dept mountain.
Best Regards ValueS
Methinks the buyback is to sweeten up a forthcoming drop in the dividend , Sensible to me.
As a newbie to all this and shareholder with a tiny amount of VOD shares can any point me to a simple explanation or explain to me what this buyback will look like to me or how this works? what will actually happen?
Porsche, it is churlish to say that buybacks are a complete waste of money. If VOD do as they say they will & spend 4 billion buying shares this is a saving of 88 million pounds on dividend payments alone.
"the buyback is to sweeten up a forthcoming drop in the dividend"
The buyback is to reduce the dividend even further! If the buyback achieves a reduction in the sharecount of 17% ( a bit optimistic given the millions of free shares the VOD management award themselves each year). Then that is a 17% cut in the amount of money allocated for dividend payout on top of the 50% cut from 2025 onwards. Making a total of 67% cut in dividend money.
Best Regards ValueS
Antsoldier - you benefit on shares being picked up on the open market and their overall being less shares in existence. So your shares own 5% more of the company than they once did. Also buying the shares should see an increase in the share price and theoretically should be worth more due to the buying demand and that they are worth more.
The theory is solid but I can’t really think of an example where this approach has ever given me decent gains I can see
Current dividend secured for financial year ending 31st March 2024. + buybacks = uplift of 23% in money returned to shareholders. Thereafter, dividend halved which at todays share price = c5.5%.
Sale of Spain + Italy = 12bn. Current market cap c20bn. Vodafone have "recovered" 60% of the current market cap from two non core areas of their business AND they state the transactions are expected to be adjusted earnings positive. VOD is well undervalued. E& knew they were buying into a good fortune storey over the next five years.
Very impressive and all has been delivered at speed (relatively for a huge organisation). Whats not to like. I commend the Board.
"Porsche, it is churlish to say that buybacks are a complete waste of money. If VOD do as they say they will & spend 4 billion buying shares this is a saving of 88 million pounds on dividend payments alone."
They'd make more putting it in a saving account
"Sale of Spain + Italy = 12bn. Current market cap c20bn. Vodafone have "recovered" 60% of the current market cap from two non core areas of their business AND they state the transactions are expected to be adjusted earnings positive. VOD is well undervalued. E& knew they were buying into a good fortune storey over the next five years. "
They have turned an asset into cash. They haven't conjured 12bn out of thin air.
I think selling them off is for the best as the current management team didn't seem to have the stomach or capability to turn them around.
I wish they would make a dent in their borrowings. Market cap is a fraction of the debt.
Kev Row agree wholeheartedly. Mr Market was blind to the intrinsic value within VOD. The Board have now released that value for all to see with non core assets sold off, and for the benefit of shareholders. Good job. Steady climb in share price over next 12 months. Exciting times at last for VOD.
" VOD is well undervalued. "
I dont see it that way in terms of asset performance ....they still have a lot of work to do to get more efficient and achieve better earnings from what they will have left ...and that is what the market cares about
I suspect the market sees some upcoming impairments in the FY Results and sees Germany still having a lot of work to do and also facing strong competition ...huge asset value on the books there, looking dodgy IMO
Egypt going through a tough time and other African nations facing tax increases as Govt debt payments rise on higher interest payments , plus currency drops against the Dollar
They are making decisions but selling Italy doesnt solve their problems, it is just one of many to deal with
IMO
The market cap takes account of the debt.
Jockos - Thank you that makes sense now
Overall, I do not see much to be positive about following this.
Vodafone DE - negative. CEO leaving indicates negative expectations for that market - i.e. they are acting now so they can announce "late turnaround" in May ("we may have missed the targets but next year...."
Restructuring - neutral, necessary by the sale of major business units.
Buybacks - negative. Exactly the same strategy that Nick Read started in 2022. It wasn't a success then so I doubt it will be success now. At least we know now whose idea it was.
Dividend cut - negative. Its a signal that current share price is not a blip but the new base.
Growth - negative. They are cutting their losses as they do not know how to grow core assets. There is no excuse for this. Please keep in mind - these are core assets - Vodafone is a telecoms operator who does not know how to run a profitable business in Italy and Spain (prosperous European countries which haven't had any major disasters in decades). No excuse for this whatsoever.
Half the posts here are seeing this as good news and looking forward to the SP growing in the next few months/years with mention of it breaking the 100p and half the posts here are doom and gloom and the SP will be droping, even mention of 35p! Looking at the SP today and the buy vs sells the market is similarly confused too!
At this price buybacks make more fiscal sense then dividend and I am sure part of the reason the dividend has been cut is the buybacks but also because it's a good reason to have more cash to put on reinvesting or paying down debt later on which seems a wise move.
For me it's good news about the sale, sensible decision on buybacks as it gives impression the company thinks the shares are cheap, sensible cut of the dividend meaning there is more money to put where the board feels is best ( whether that's to pay debt, invest more in company, pay extra dividend or something else).
Let's see if the can do as good a job restructuring and simplifying the business as Aviva seem to be doing.
"Half the posts here are seeing this as good news and looking forward to the SP growing in the next few months/years with mention of it breaking the 100p and half the posts here are doom and gloom and the SP will be droping, even mention of 35p! Looking at the SP today and the buy vs sells the market is similarly confused too!"
The share price going up to 100p would certainly make the share buybacks less impactful. Divi cuts/buybacks just seem to put a ceiling on the price rather than a floor.
At least if the divi going forward is based on any growth, it should be perceived as being sustainable which it clearly wasn't until now.
I can understand if you have been in this sometime you could be really wary here after being battle scarred. As a newbie here I take todays news as clarity (I hope) at last re the divi and intentions going forwards. Good luck all.
Jetesh, losing your shiirt on that short are you
They had to cut dividend, even though Italy and Spain are below the cost of capital they were paying some of the dividend, as the cost of capital includes cost of equity. A cut if 50% was disappointing though as those 2 countries were definitely less than 50% of the cost of equity proportion
Share price rising by the amount of the confirmed final dividend ..pricing it in ...
Beo1
div cut of 50% also because they tend to save cash to invest in the business rather than hand it to shareholders ..investing part of earnings as CAPEX rather than borrowing I suspect
so..really looks like the debt drunk is finally putting down the debt bottle , and deciding to get healthy !!!