Member Info for fleccy

The imminent approval of a US spot ETF is currently sucking all the air out of the room, CNBC seem to be talking about it every time I've looked in today. I've taken a long hard look at Bitcoin and I just don't understand why any sensible person would invest in it. Poker the reason I'm mentioning this is because I'd be interested in your view of Bitcoin and Crypto/DeFi in general.

How does Bitcoin Mining work:

Bitcoin is mined by processing Blocks using ASICS to compete in a race, to find to a Hash lower than or equal to the Target Hash. The large Miners build huge ASIC farms to increase the probability of finding a winning Hash, or smaller Miners join Pools, where all the ASICS in the Pool work together to increase their chance of finding a winning Hash. The Network runs a difficulty algorithm that looks at the number of Blocks processed, and either increases or decreases the difficulty every 2016 Blocks, dependent on the average time taken to reach the 2016 Block difficulty change point; The idea of the difficulty algorithm is to limit the overall speed Blocks are processed, to an average of one Block every 10 minutes; The more Network Hash/processing power used to find a winning Hash, the faster the Network will process the 2016 Blocks causing the difficulty algorithm to lower the Target Hash, making a winning Hash harder to find. Because of the race to find the winning Hash the Proof of Work method requires massive amounts of energy, to power the huge number of ASICS required for the miners compete and win the Bitcoin reward. The transaction space available in one BTC Block is around 1mb, so the Bitcoin network can only process 1mb of transactions every 10 minutes, which is pitifully slow. Each halving comes around approximately every 4 years, and reduces the Bitcoin reward by half for the miners who find the winning Hash, the next halving is due around this April and will reduce the Bitcoin reward to 3.125 Bitcoin per processed Block. The Miners rely on the Bitcoin price to increase with each halving, otherwise the on-grid miners wont be able to cover their operating costs and make a profit. As the BTC reward falls, in the absence of the Bitcoin price increasing, the miners will have to rely on transaction charges to fill any gaps in income.

My view is that Bitcoin is the most hyped, artificial, useless investment the planet has ever seen, so the fact that people plough their hard earned cash into something comparable to the Emperors New Clothes is astounding in my opinion. The vested interest commentators have telegraphed various use cases and narratives to pump the token, with the only remaining one describing it as Digital Gold, more like Digital Fool's Gold if you ask me.

Is it any wonder companies that actually do useful things are down in the dumps in this topsy turvy investment world?

I'm still awaiting a convincing argument supporting any value in Bitcoin, maybe someone on here can set me straight?

There are a couple of reasons I have faith in BT and Vodafone; One is that the Telecom sector has been trashed for years and is overdue a different narrative, the other reason is the persistent trashing of UK stocks over the same period, also overdue a change of narrative. From recent articles I believe the Government are starting to view UK stock valuations as a serious issue and will start looking at ways to turn this around. I suspect there'll be some sort of carrot and stick approach, probably centered around tax benefits and allowances. If I was in Government I'd immediately end the right to hold foreign stocks in ISA's and make them available for UK listed stocks only. There are also changes they could make to encourage UK based investment and pension funds to invest in FTSE stocks. I don't see why any UK based investor should receive tax benefits for investing in Foreign markets.

As far as my opinion's concerned, I just tell it the way I see it and present arguments reflecting my opinion, and if I get something wrong I'll admit it and make corrections as necessary.

I even received criticism after I've gone to the effort of producing charts detailing Vodafone's debt maturity, and reduction in Bond debt over time if debt repaid without refinancing; You just can't please some people.

I can't fault anything you've just posted Poker, you're pretty much spot on.

Why don't they just offer a cheaper more reliable service than the competition? Everything has to be paid for, a tablet is only good for someone who needs it, many will choose to buy their own Tablet and go for the cheaper service. I buy my own phone and use a Sim only deal, and we're on Sky but I wont use Sky Glass because I'd rather choose and use my own TV. What Telefonica do in Spain, or wherever abroad, has little bearing in the UK.

Not really Steve, they don't have to get rid of the debt completely, they just need to reduce it to more acceptable levels. I suspect they'll target a Net Debt figure of around €20 Billion.

But Telefonica's underperformed BT over the last 5 years:

https://www.google.com/finance/quote/BT.A:LON?comparison=BME%3ATEF&window=5Y

Orange has done better, but DT has been the clear winner because of T-Mobile US

https://www.google.com/finance/quote/BT.A:LON?comparison=BME%3ATEF&window=5Y

Poker Telefonica might own half of VMO2, but VMO2 isn't part of Telefonica, so what Telefonica do internally is irrelevant to BT. What irks me about Telefonica is they canvassed the EU to kick BT off the TESTA contract after it was awarded to them.

https://www.politico.eu/article/outrage-eu-deal-uk-bt-confidential-network/

"However, BT had managed to win first place for the tender after applying through its Belgian subsidiary, BT Global Services Belgium, individuals close to the matter confirmed. The provision of services had been due to commence last year but had been delayed, and is now likely to begin later this year. The term of the contract is eight years"

https://www.telcotitans.com/btwatch/bt-loses-out-in-eu-data-exchange-controversy/6665.article

"Legal proceedings had been launched in April by rival bidding partners Telefónica and Indra Sistemas, alleging that BT’s bid was reviewed under a different set of criteria to that used for Telefónica’s proposal. Controversy in the courtroom saw the EC freeze the contract transfer from former provider Deutsche Telekom, with the German incumbent still delivering TESTA since"

I think we can safely say VMO2 will struggle to win any UK Government contracts, with Telefonica being so actively involved in kicking BT off a lucrative EU contract BT won fair and square. It's likely the reason BT won the bid is because they had a superior offering at a more competitive price. I think that contradicts your statement that Telefonica are better than BT. The only European Telecom player seeing positive market treatment is Deutsche Telekom and that's entirely down to their US holding in T-Mobile.

Surprised no one picked me up on this. In my 12:14 post I said "H1 Business adjusted EBITDA came in at £903 Million, with Revenue of £4.041 Billion and Operating costs of £3.138 Billion"; That was H1 2022 lol, the Adjusted Revenue for Business H1 2023 was £4.064 Billion with an Adjusted EBITDA of £806 Million.

Poker Blackrock can do what they want, in my opinion the market's rigged anyway with lots of opportunities for the market elite to move stock/sector prices as they please. I'm invested for the long term and short term pricing is just noise as far as I'm concerned. Why would anyone ditch BT now, when the cost savings and Capex reductions are on the horizon?

BT aren't falling behind though. Are the Altnets supplying Quantum secure links? If they are I haven't seen anything suggesting that; Because of the publicity and sensitivity around store now and decrypt later, Enterprise and Government are starting to pay more attention to their Quantum security needs, so various layers of Quantum secure encryption using Quantum secure links are becoming available at the enterprise level.

Small business have different needs, they're more likely to focus on price, speed and resilience. Most households can probably manage on 100mb/s download and for Gamers the more important metrics are Latency and Jitter, which is why a lot of Gamers have apparently complained about VMO2 when it comes to their DOCSIS connectivity. Symmetrical services like XGS-PON are overkill for 99% of households, but Altnets are using it because it allows them to extend the number of premises connected per single fibre and makes for good marketing; BT are saying they don't currently see a business case for upgrading links to XGS-PON, but it can be run over the same fibre as GPON should it be required for future upgrades.

EE's mobile network gives them the facility to offer customers 5G resilience, as well as opening all sorts of IOT opportunities as it becomes ever more important; There are also big opportunities for 5G private networks. Adding everything up BT, VOD and VMO2 are the only companies that can cost efficiently offer a one stop shop for everything, so we might see some or all MNO's and MVNO's at a disadvantage in the new environment.

Poker with a massive FTTP/5G rollout sucking up any spare Capex, PSTN switch off on the horizon, changes in the way communications will work going forward, what more can the BT BOD do? As pointed out in a previous post, BT are innovating with new products as we move into 5G and an era where Quantum secure communications will become ever more important, so they are doing things in the background.

Poker the H1 Business adjusted EBITDA came in at £903 Million, with Revenue of £4.041 Billion and Operating costs of £3.138 Billion, so £1.7 Billion Adjusted EBITDA might be doable dependent on how they've accounted for Operating costs in H1, companies account for certain things in weird and wonderful ways. Looking forward, I suppose much will depend on BT's ability to produce innovative secure B2B products at a competitive price, but competitive pricing is also tied to BT's overall cost savings. Obviously the move to Cloud/IP and convergence will mean everything changes for small business post PSTN switch off, as long as BT can compete in technologies like SDWAN/VOIP and offer sweeteners like diversity and backup solutions, that others can't, BT should do well.

Historically BT have gained enough experience to know how to compete in a strict regulatory environment, I suspect we're currently seeing a rerun of the 1980's/1990's when the Cable Companies were building out their networks. I don't believe any of the new competition can compete against a leaner transformed BT, but that's just my opinion.

I expect at least a 49% share of Openreach will eventually be IPO'd, once the pension deficit is resolved and the pension scheme subject to a buyout, so all that'll be put to bed and OFCOM will eventually get what they want. BT has a stunning array of assets that the market is turning a blind eye to, eventually it'll have to take a different point of view. All this is just my opinion, everyone should do their own research and formulate their own opinions.

Poker BT have partnered with OneWeb to backhaul 5G from remote areas, they are also partnering with a HAP company to provide 5G services from the sky, as well as developing Drone corridors.

https://advanced-television.com/2023/11/20/bt-tests-haps-delivery-for-5g/

https://business.bt.com/corporate/products/enabling-your-places/protect/drone-solutions/project-skyway/

https://www.theguardian.com/business/2023/jan/04/bt-invests-5m-in-plan-for-drone-superhighway-across-southern-england

https://newsroom.bt.com/bt-and-oneweb-deliver-high-speed-satellite-connectivity-to-lundy-island/

I've worked with Terrestrial line of site microwave, so I know a bit about the limitations of RF as you climb the SHF band, with things getting really dire the higher up the EHF band you go, so any long distance viable communications will have to be at lower frequencies, otherwise atmospherics will make it unworkable. One way you can squeeze more bandwidth out of lower frequencies is to use QAM or QPSK to increase the number of bits encoded within the signal, but the more you modulate, the more you're susceptible to noise and interference. Because of Bandwidth/Frequency/atmospheric limitations, satellites are only ever going to be able to provide a limited mobile service from space, even if Starlink satellites at 550Km could provide a strong enough downlink signal to a smartphone, the smartphone would really struggle in the uplink direction. HAP's are a lot closer to the ground at around 20km, so could be used to provide viable 5G service over a wide rural area and relay to a satellite or ground station. In my opinion Starlink have gone over the top planning to put around 12,000 satellites in orbit at altitudes of around 550km, the OneWeb plan to have 648 satellites at twice the altitude providing backhaul connectivity to CP's seems far more sensible.

I suspect you knew about BT's business developments since you more or less listed the most recent publicised offerings:

https://newsroom.bt.com/bt-launches-virtual-ward-programme-to-help-transform-uk-health-services/

https://business.bt.com/public-sector/organisations/health/

Then there's BT's QKD offering to protect client data:

https://www.hsbc.com/news-and-views/news/media-releases/2023/hsbc-becomes-first-bank-to-join-the-uks-pioneering-commercial-quantum-secure-metro-network

https://www.verdict.co.uk/bt-group-gets-grant-for-method-of-performing-quantum-key-distribution-using-non-orthogonal-basis-states/

https://www.quantumcommshub.net/industry-government-media/collaboration-opportunities/case-studies/bt/

BT have been heavily involved in R&D for as long as they've been going, I don't think any other Telecoms company can claim to have done more to contribute to developments in communications technology.

There's very little BT can do to grow revenue as the UK incumbent, what they can do is focus on growing the bottom line through cost cutting. BT are currently in the middle of a big Capex cycle which probably has a further 3 years to run, but once the FTTP/5G rollout and PSTN switch off is completed, Capex will fall to much lower levels and the cost savings will show through in the figures. The risks are that the Altnet's will take a percentage of BT/Openreach's business, but BT have had to deal with significant competition since the 1990's, so this isn't a new thing for BT.

I think the market underestimates the savings BT will achieve on the back of the FTTP rollout, and the move to a fully converged IP Network. Since FTTP is passive from the exchange to the premise there's no requirement for powered street cabinets, apart from a small percentage of subtended head ends for rural rollouts. The PSTN network is heavy on power and building space, and BT are reducing the number of buildings from over 5000 to around a 1000 after 2030, but the savings will start before then with the decommissioning of the exchanges from 2026 onward. BT's energy bill should drop through the floor from 2026, as air-conditioners, exchanges and redundant legacy transmission equipment is switched off, removed and sold off; As well as the advertised scrap copper cabling, BT will also have massive amounts of redundant scrap circuit boards, batteries, generators Air-cons, etc which should be worth a tidy sum when sold, BT will bring in a specialist company to deal with that.

Adding everything up, BT will be a much leaner more efficient company at the end of all this; If the market is as forward looking as we are led to believe, they will have to rerate BT upward at some point before 2026.

Lol, I walked into that one.

I've watched quite a few Pensioncraft youtube videos, but I usually miss some of the detail because I spend time questioning why he wears makeup including bright lipstick, and left wondering whether he'll one day appear wearing a wig and a dress.

I doubt there'll be any special dividends due to these windfalls, personally I'd be happy to see the dividend restored to pre covid level.

Well Rob investors have a choice, they can either sell up and invest a different stock they think will do better, sell up and give up accepting a loss to their capital, or top up and average down. Personally I've decided to top up and average down, whether or not that's the correct decision only time will tell. I know people who've invested and panicked when the price dropped, selling out and turning a paper loss into a capital loss. The reason I choose the companies I do, is because they pay dividends that can be reinvested should the price drop, if the dividends are subsequently suspended or stopped, well I cross that bridge when it happens. There's only two events that matter when you're looking to invest, they are the price you buy at and the price you sell at, anything in between is just noise.

Poker I didn't express an opinion in respect of the new retail offerings of smart appliances. I think it's a good thing and unlikely to cost BT anything to implement, but at the same time I don't see it being a gamechanger affecting the long term Financials.

Rob, I don't think I'm funny. If I wanted to take a return on my invested capital, I could simply spend the dividends as they come in, but since I don't need to, I reinvest them. I live in an amazing house next to a country park and fields full of horses are a hundred yards from my doorstep, so I don't really have that much to spend any recovered capital on. In the event of anything happening to me, my wife could use the dividend income to supplement the widows pensions she'd receive from my DB pension schemes, or alternatively the children could inherit any shares when we both pop off. I'm in no hurry to cast off my mortal coil, or sell my shares, but everyone's situation is different and you shouldn't assume you know mine.