Member Info for fleccy

"halving 2.31p isn't exactly a financial tremor "

I realise that, but UBS suggested a full year halving which would hurt people dependent on the dividend for income. Personally I've been reinvesting dividends as they come in, so it wouldn't be life changing, but it would certainly hurt my reinvestment strategy. The BOD would get hammered if they did do anything with the dividend, as they reconfirmed the progressive dividend policy in the FY23 report. The chance of BT halving the dividend is close to zero percent in my opinion.

I couldn't guess Poker.

Here's the JV Proforma with the key points:

https://www.bt.com/bt-plc/assets/documents/investors/financial-reporting-and-news/quarterly-results/fy23/sports-jv/bt-group-provides-historical-pro-forma-to-reflect-formation-of-sports-joint-venture.pdf

BT have reconfirmed at least maintaining the dividend, so for UBS to suggest a halving of the dividend is ridiculous to say the least; The only reason, I can think of, for mentioning the dividend in the article is to put the frighteners on nervous investors.

"BT doesnt provide cash costs of around £200mln per year for the BT Sport JV...does it ?"

I'm not an accountant, so I have no clue how to interpret the sections detailing Financial changes around the JV, but BT decided to go with Warner so I assume they considered the deal as advantageous. There are various figures banded about in the FY23 report, here are a few examples:

"BT plc has entered into a distribution agreement with the Sports JV to procure the sport content required to continue to supply our broadband, TV and mobile customers. BT plc’s agreement with the Sports JV will extend beyond 2030 and for the first four years includes a minimum revenue guarantee of approximately £500m per annum, after which the agreement will change to a fully variable arrangement. "

"As part of the BT Sport transaction, the group has committed to providing the Sports JV with a sterling Revolving Credit Facility (RCF), up to a maximum for £300m, for short-term liquidity required by the Sports JV to fund its working capital and commitments to sports rights holders. Amounts drawn down by the Sports JV under the RCF accrue interest at a market reference rate, consistent with the group's external short-term borrowings. The outstanding balance under the RCF of £268m is treated as a loan receivable and held at amortised cost. The capacity of the RCF is expected to reduce to £200m in the medium term. There is also a loan payable to the Sports JV of £11m."

UBS could be referring to a loss in profit, due to loss of subscription earnings/revenue now going to the JV, or anything. If there are any accountants on here, maybe they could shed some light on this?

BT also said:

"We are today declaring a final dividend for FY23 of 5.39 pence per share (pps) (FY22: 5.39pps), bringing the full year total to 7.70pps (FY22: 7.70pps)

We reconfirm our progressive dividend policy which is to maintain or grow the dividend each year whilst taking into consideration a number of factors including underlying medium-term earnings expectations and levels of business reinvestment

The Board expects to continue with this policy for future years, and to declare two dividends per year with the interim dividend being fixed at 30% of the prior year’s full year dividend"

The fact that UBS speculated a halving of the dividend, tells me everything I need to know about the article; It's probably targeting retail dividend/income investors to either discourage prospective buyers from buying in, or encourage nervous holders to sell and invest elsewhere. Polo Tang has a history of pumping out negative articles about BT, personally I view his opinions as biased and possibly motivated by vested interest.

This is what BT said about the outlook:

"Financial outlook

We expect to be a significant beneficiary of the UK Government's full expensing scheme from FY24-FY26 and expect to pay no UK cash tax for the next three years. With demand for FTTP well ahead of our expectations, we will reinvest this benefit into further accelerating our FTTP connections and absorbing inflation whilst remaining committed to our target of building to 25m premises by the end of 2026, bringing our annual capex outlook to £5.0-5.1bn for FY24-FY26 inclusive. We expect take-up to accelerate beyond 30% whilst maintaining our build cost envelope of £250-£350 per premises.

FY24 Outlook: adjusted revenue and adjusted EBITDA growth on a pro forma basis driven by CPI-linked pricing and the impact of cost transformation; despite expected headwinds from cost-of-living pressure, and cost inflation, including higher energy costs. Normalised free cash flow for FY24 is expected to be between £1.0bn and £1.2bn as the tax benefit from full expensing will be offset by higher capex. Cash capex in

FY24 may be up to £200m higher than reported capex of £5.0 to £5.1bn due to the repayment of government grants resulting from higher than expected fibre take-up on the BDUK programmes.

Beyond FY24, we continue to expect consistent and predictable adjusted revenue and adjusted EBITDA growth driven by CPI-linked pricing and by cost transformation. We remain confident in expanding normalised free cash flow by at least £1.5bn, when compared with FY22, by the end of the decade. This comes from lower capex and lower opex as we move past peak capex and towards an all-fibre, all-IP network."

"The shareholder meeting is next week if that is what you mean"

Nope, I just confused myself, I had it in my head the dividend was due next week and looked on my calendar and noted the number without looking at the month, as I said a senior moment.

Oh yeah, senior moment lol. I had it in my head it was July now, that's what retirement does to you 🫤

Polo Tang is a perma bear when it comes to BT. I'm a bit suspicious about who he may be connected with, since his downgrades often appear to accompany large drops and I find it hard to believe it's down to his downgrades.

I suppose it could speculation over that, or some negative news has leaked out.

Ex dividend next Monday, and my VOD dividends come through Tuesday or Wednesday. I've earmarked my VOD dividends for investment into BT on the Ex Dividend drop. The BT share price has dropped 15% in the last 3 weeks, for no reason I can see, so I'll top up immediately the dividends land.

What's the size of the holding? I can't see them on the Simply Wall St top 25 owners list.

"I thought Telereal owned the freehold with BT leasing back"

I'm not sure, I originally thought the same as you and then read some articles contradicting that. I've taken a another look and found this document:

https://www.bt.com/content/dam/bt-plc/assets/documents/investors/financial-reporting-and-news/annual-reports/2002/bt-annual-report-form-20-f-2002.pdf

"In December 2001, as part of a wider property outsourcing agreement, the group entered into a sale and leaseback transaction with Telereal, a joint venture partnership formed by Land Securities Trillium and The William Pears Group. Under the terms of the transaction, BT transferred substantially all of the group's interest in most of its UK freehold and long leasehold properties and also its obligations in respect of rack rented properties to Telereal for cash consideration of £2,380 million. Of the total profit in the year from the sale of property, £1,019 million relates to this transaction. BT has rented the majority of these properties from Telereal for a thirty-year term. Telereal will also be providing facilities management services to BT. The transaction comprised the effective sale of freeholds (through leases of up to 999 years) of the majority of the group's UK properties and the assignment of short leasehold property obligations. The resulting leases of the portfolio to BT have been accounted for as operating leases under applicable UK accounting standards."

If you read that exactly as it's written, "effective sale of freeholds (through leases of up to 999 years)", it suggests that Telereal were sold 999 year leases but BT retained the Freehold on the land.

I think BT and Telereal have also done a deal around when Exchanges become vacant, to share the profits from repurposing and redevelopment and it did mention something about that in a case study page on Telereal's website, I've seen previously, which appears to no longer exists. I don't know why the case study's been removed from Telereal's website, but it appears BT have a finger in the pie when it comes to repurposing for alternative development.

The title of this thread is ridiculous and so is Vodafone's P/E of around 1.95, the market is having a laugh in my opinion. Although I too am a long term holder, and enjoy the dividend, I believe they should suspend the dividend after the next payment and divert the cash into Buybacks. Telecoms in general are under the cosh, with Vodafone especially affected, and a victim of market games. What I don't like, is the way the market have tools to build large holdings under the radar, with little impact on the price, but companies are subject to strict rules preventing them from buying back their own stock without advising the market in detail first. At the current price it makes sense for Vodafone to buyback large quantities of its own stock, until the price exceeds a certain level, it's a no brainer.

"It’s very expensive for the amount of debt On a PE ratio of 10. Can see this dropping to a PE ratio of 6."

I haven't bothered working out the P/E myself, but various sites are putting it below 2.

https://finbox.com/LSE:VOD/explorer/pe_ltm/#:~:text=Vodafone's%20p%2Fe%20ratio%20for,March%202022%20at%2040.4x.

https://www.google.com/finance/quote/VOD:LON

https://simplywall.st/stocks/gb/telecom/lse-vod/vodafone-group-shares/valuation

Jax, you've missed your vocation, you should be in stand up comedy. Lets look at your 0 to 20p figure.

As of the 1st June, Vodafone's total voting rights were 26,994,311,626, so a share price of 20p would value Vodafone at around £5.399 Billion; Which would mean Vodafone could buyback all their stock using their cash stash and still have loads left over for other things. You should think before you type.

"The Openreach telephone exchange footprint is currently around 5,500 exchanges where copper services, LLU and some fibre services such as leased lines are run from. By 2030 as part of a much larger plan Openreach is looking to close 103 of these after an initial trial of five exchanges in the 2024 to 2025 period."

"The eventual fate of the actual exchange buildings will depend on the freeholder, but with 99% of the exchanges being in central locations of towns and villages, we expect there to be a wave of change of use planning applications and homes or apartments to replace them."

https://www.thinkbroadband.com/news/9601-openreach-aims-to-close-100-phone-exchanges-by-2030

Guess who owns the Freehold on the BT Exchanges.

"The property agreement will see BT selling outright about 30% of its buildings, but maintaining occupancy agreements with the buyer.

It will also sell the leasehold on about 70% of the properties, but it stressed these were operational buildings for which it would retain the freehold and exclusive control."

https://www.dailymail.co.uk/news/article-12290/BT-raise-2bn-property-sell-off.html

I have to admit, I thought they'd aim to close a lot more than 100 Exchanges by 2030, maybe that figure will change.

The talk of windfall taxes is noise in my opinion, as any money taken out of the banking system, due to windfall taxes, will likely lead to a drop in loans to businesses and individuals and quickly feed through to the real economy. As far as Government telling Banks what to do, it's a given since Banking is a heavily regulated industry, as is Telecoms, Energy companies, Rail companies, etc.

Obelix you should worry more about your investment in QBT, rather than debating whether or not I'm being honest about my investments. Incidentally I don't worry when the price of my stocks drop, since it allows me to drop my average cost per share with top ups. As far as my mental health's concerned, I consulted my alter ego and he said we're peachy.

I know it's awesome, Lloyds is down over 8% over the last 5 days and if it goes into the 30's imagine how many more shares their current buyback program will remove from the market.

Here's a chart showing the recent reduction in shares in issue due to buyback programs:

https://docs.google.com/spreadsheets/d/e/2PACX-1vS0oSavIsBjHgD7k6NMyk7Z591Cm2IrevvLI-Jq95gOmESrOI0Vi_NhA8LIO9rMz90Y5zCOCoFuEItG/pubchart?oid=1812824850&format=interactive

Then there's the forecast increase in the dividend from the current 2.4p to 2.8p in the current financial year. All this means is any dividends reinvested in the next couple of months will buy more shares and generate more dividends going forward. Unlike growth stocks that don't pay dividends, value dividend stocks give portfolio growth through dividend reinvestment, especially when the price is getting hammered. Reinvesting dividends has a compounding effect and that is magnified as stock prices decline.