Member Info for Curtin

Let’s use Swisscom proposal as a benchmark for evaluating Vodafone: multiply projected EBITDAal by 7.6: 13.3Bx7.6=101B. Minus 36B debt=65B. That would be more than £2 per share but in that order of magnitude.

Well, also Swisscom proposal is for the entity value of the Italian business. However, I agree that it is not comparable with Iliad proposal.

Besides, nothing stops Xavier Niel from replicating Swisscom proposal and increase it from 8 B to 8.5 B. I also agree that the real risk is that the Swiss confederation stops the deal.

In my opinion Swisscom proposal is not bad: the multiple EV to EBITDAaL is 7.6.

Consider that the comparable figure for the entire Vodafone is 4 (Net debt 36.2B+18B market capitalisation=54B EV. Projected EBITDAaL is 13.3 B. 54B/13.3B=4).

Xavier Niel took his company private (2 or 3 years ago) after paying a premium of over 60% to minority shareholders; since then, he has made other investments in tlc companies, mainly financed with debt. Probably he is a great entrepreneur and maybe it does not hurt to be married to the daughter of France’s richest men.

However, it seems that in the tlc business it is easier to raise debt than to issue equity.

At the same time, we are continuously warned about Vodafone “huge” debt. That is puzzling…

Xavier Niel took his company private (2 or 3 years ago) after paying a premium of over 60% to minority shareholders; since then, he has made other investments in tlc companies, mainly financed with debt. Probably he is a great entrepreneur and maybe it does not hurt to be married to the daughter of France’s richest men.

However, it seems that in the tlc business it is easier to raise debt than to issue equity.

At the same time, we are continuously warned about Vodafone “huge” debt. That is puzzling…

Yes, but also no news to go down. The stock is significantly manipulated

Today many tlc companies are down approximately 2%: Deutsche Telekom, Orange, BT, Vodafone.

Today I had a look at three long term bonds issued by Vodafone, Telefonica and Deutsche Telekom; all of them are fixed interest, US $ denominated, with special call. According to the Frankfurt stock exchange, the yield cannot be calculated; therefore, I compared their price performance over the last three years. Not surprisingly, all prices went down significantly; however, Vodafone performed better than both Deutsche Telekom and Telefonica (see prices below). Clearly, this is not a significant sample; however, it could mean that Vodafone has become more attractive for debt investors, compared to other telecom companies.

Price (3 years ago; last close; % change)

Vodafone Group PLC 7% 19/79 122.1; 103.1 (-16%)

Deutsche Telekom I.F. B.V. 8,75% 00/30 151.8; 117.8 (-22%)

Telefonica Emisiones S.A.U. 7,045% 06/36 142.1; 109.0 (-23%)

MILAN, Feb 15 (Reuters) - Telecom Italia's (TIM) competitors have written to the Italian government to voice concerns about the risk that a planned spin-off of the former phone monopoly's network assets reinforces its dominant position in the fixed broadband market, a document showed.

In addition, Vodafone (VOD) may have received a new offer for its Italian unit, according to the report, which cited people following the matter.

I hoped that Hatem Dowidar joining Vodafone's board meant E& had reached 20%. Apparently, that is not the case. However, it could mean that important issues have to be discussed in the near future and the most likely one is a new offer for Italy.

Or maybe because it's valentine's day

87 M bought at the end of the trading session, price 64.15. Could be E&

Remember the Keynesian beauty contest. Keynes believed that investors are pricing shares not based on what they think an asset's fundamental value is, but on what they think other investors believe is the average opinion about the value of the asset (source: Wikipedia). I think the Fool can very well represent the average opinion.

Https://www.fool.co.uk/2024/02/07/why-on-earth-have-vodafone-shares-crashed-to-a-30-year-low

Are things really as bad as the plummeting Vodafone share price suggests, though? Vodafone has a well-known brand, large customer base, and well-established footprint.

Even after the reduction, the debt level concerns me especially in an environment where interest rates are set to remain higher than they were for a long time.

The shrinking business footprint could cut both ways. On one hand it might not be a sign of a business in growth mode. Then again, focussing on fewer of the company’s big markets could help it improve performance there. That might actually help it improve its profitability.

A dividend cut is a risk. Right now, Vodafone shares offer a 12% yield – something we rarely see in the FTSE 100. But the board has not yet made a cut or signalled it intends to do so. With debt falling, there is an argument that a cut now seems less likely than a year ago.

Plus, even if the payout was reduced, it could still be above the average FTSE 100 yield.

Value in plain sight

In short, I think Vodafone shares look cheap for what they are.

The company may not face smooth sailing ahead. But I reckon that is more than reflected in the current price.

If I had spare cash to invest now, I would be happy to add more to my portfolio.

SilverSpoons, I agree with your comments. I would add that during the last 2 years inflation alone has reduced by 15% the real value of Vodafone debt, making it much more sustainable in the long run, particularly if interest rates go down.

However, I am afraid that the share price will not recover significantly without some commitment from the main shareholders. My feeling is that they are occasionally shorting the stock.

In my opinion the investigation into the merger of Vodafone and Three might partly explain today’s performance. Wall street is obsessed with China.

Swisscom (SCMN.VX) representatives are in Milan these days to work on a new, improved offer to be submitted to Vodafone (VOD.L) which aims at a merger of its Italian unit Fastweb and Vodafone Italia, Il Corriere della Sera said.

I agree, it wasn’t a great offer.

Besides Vodafone could receive other offers for Italy.

LONDON, Jan 31 (Reuters) - Vodafone (VOD.L) said it was pursuing other deals in Italy after it rejected a merger proposal from rival Iliad.

"We said in December that we are exploring options with several parties in Italy. We are no longer in talks with Iliad, but our discussions with others continue," a Vodafone spokesperson said on Wednesday.

It has been a good day. Still I find it puzzling that on December 15 “Iliad wants to finalize JV proposal for Vodafone Italy by end-January” and on December 18 the proposal is ready.

Pokerchips, you have a point. I only wanted to show that at these prices a takeover and breakup of Vodafone is not unlikely. PersonalIy I would prefer Vodafone to remain independent and recover.

I think Emirates Telecommunication Group Company (ETG), which is owned by Emirates Investment Authority (EIA) could very easily make a bid for Vodafone and then sell some assets to help financing the deal: for instance it could sell Italy to Xavier Niel.

EIA owns 60% of ETG, which has a market capitalization of 46B$ vs Vodafone’s 22.2B$. Based on 2022 data, ETG has limited debt: the figures are not very clear to me, but gross debt is between 13 and 17 B$.

With very little support from EIA, ETG could make a bid for 80% of Vodafone offering a 50% premium over current stock price. That would cost 22.2B$ x 1.5 x 80%=26.6B$. In addition, ETG would absorb Vodafone’s debt, which could be served and paid back easily just by cutting dividends.