Member Info for fleccy

Some of the innovations, highlighted halfway down the article, seem interesting.

https://www.vanillaplus.com/2022/11/07/74113-telcos-pull-down-hatches-but-sunshine-can-still-shine-through/

"Fleccy, you mean far enough away to be of NO concern. Best go back to cut & paste. Safer that way."

Yeah, that's what I meant. That's what happens when you're in a hurry lol.

For anyone following this, there's a case management conference on the 18th November, but the trial appears to be scheduled for 2024, well over a year away, Far enough in the future to be of concern in my opinion.

"The period for listing a Trial, as set out in paragraph 11 of the Directions Order, shall be amended to the window between 22 January 2024 and 29 March 2024."

https://www.catribunal.org.uk/cases/13817721-justin-le-patourel

"And that is the problem when investing in this company -
BT is likely to be hobbled by regulation.
The longer term winner is likely to be consumers and not BT share holders."

FP, if you're saying the Government/Ofcom will force BT to drop prices to appease consumers, then where would that leave Altnets? The Altnets already took legal action over Equinox, with an anticipated Equinox (round) 2 likely to raise more controversy, so the more Openreach/BT lower prices the more strain it places on Altnet margins. There's a fanboy element that thinks everyone will migrate onto the CityFibre, etc, because they'd want access to XGS-PON with synchronous data rates, but most will go where they get the cheapest service meeting their requirements. Should Openreach/BT decide to aggressively target customers with extremely competitive pricing, the Altnets would suffer major problems as their lack of scale would drive their margins down to nothing, or lower.
FP, BT is completely replacing its copper network with PON, switching off PSTN, and reducing its building footprint by over 80%, how many staff do you think they'll need once the work is completed? I'd say a fraction of the current workforce.
As I've said on many occasions, in my opinion an investment in BT wasn't about growth in the top line revenue, but about huge potential to cut costs and increase the bottom-line Net Profit.
I can't believe the number of articles with comments along the lines of BT's mammoth £19 Billion of debt, without any mention of Lease Liabilities, here's an article giving an example of what I'm talking about:

"BT's net debt, meanwhile, has soared from less than £9 billion ($10.2 billion) in early 2017 to more than £18 billion ($20.3 billion) at the end of March,"

https://www.lightreading.com/regulatorypolitics/bts-post-covid-message-to-uk-pay-us-more-as-we-pay-you-less/a/d-id/781588

The statement implies BT has borrowed an extra £9 Billion since 2017, but the increase in Net Debt was due to the accounts recognising long term Lease Liabilities as Net Debt rather than an ongoing operational expense. It's true that BT's Financial debt has increased since then, due to investment in Fibre/5G and pension contributions, but it's more like an increase of around £4 Billion. If Jansen meets his target of £3 Billion annual cost savings by 2026, that will add to the bottom line and Net Debt should decrease as the building closure program reduces Lease Liabilities. Something else to bear in mind is the Capex will start reducing as rollout of FTTP and 5G progresses to the final stages, so the reduction in Capex in tandem with a cost cutting program will add heavily to the Net Profit.
All of the above is my opinion based on forward looking statements issued by BT, I'll happily be corrected if anyone can find any fault in anything I've said.

"It is a shame you thought BP were defying gravity at 350p."

The comment was made on the 28th Feb, in reference to BP with its stake in Rosneft and a potential financial write off up to $25 Billion, which seemed to me to be a fair opinion at the time; Imagine how the market would treat BT if it advised an asset worth a quarter of its market cap was at risk. As it turns out, BP and Oil companies in general have benefited greatly from the subsequent sanctions imposed on Russia, and the geopolitical macro environment. I suspect the market is banking on BP getting some sort of future windfall on its Rosneft stake, but that may or may not happen. Even though BP has written off its stake in Rosneft, it seems the market is still viewing it as a ringfenced asset and assigning a value to it, but that could change.
As far as BT's concerned, I'm not bothered what the share price does in the short term. My next dividend payouts are due in February and I'm looking at using them to add to my BT holdings at the current price. As far as Lloyds is concerned, I see that stock as bargain basement too, but the last top up took our holdings to over 400,000 shares so I've decided to look elsewhere for now, with BT being the current focus.

"I allways follow Fleccy's post's, that is why I have just dipped my toes in again"

As long as you do your own research as well. You should check for yourself, anything you read on forums like this.

Blade runner, the fact you keep calling me Fleecy, instead of Fleccy, highlights your spam mentality.
All I do is express an opinion backed up by facts, all posters like you do is talk about the share price in isolation of any other fundamentals.
I've talked about:
Net Debt reducing as lease liabilities shrink.
A big increase in Net Profit and free cash flow once FTTP/5G Capex ends.
All the opportunities for cost savings going forward.

Before you accuse me of ramping, why don't you explain if anything I've stated is untrue, or unachievable? I can back up everything I say with links to current and forward-looking statements.

What do you add to back up your view? One sentence, "The income isn’t matching the bills to pay", which is total b0ll0x, pardon my French.

"We are in the process of setting up further meetings with the company next week."

Probably talking to discuss the way forward with workforce reductions. It's funny an announcement advising CWU discussions are restarting following BT advising Job reductions. Only a month ago, BT reiterated they wouldn't reopen talks in reference to the 2022 pay review, so my guess would be that any reopening of pay discussions will also include a way forward with big job reductions.

"Fleccy I’m sure that 75% of the Telereal estate is due to close and be sold off from 2026 onwards"

You may well be right Erik, the reason I said 2030'ish is because the deal was done in 2001 with a minimum lease term of 30 years, with a flexibility arrangement allowing BT to reduce the size of the estate over time.
According to articles I've seen, BT want to reduce the number of Exchanges, down from the current 5600 to around 1000, which would mean a reduction of 82% on the current number, so I suppose closure timings will depend on any changes BT can negotiate with Telereal.
An 82% reduction in properties should knock a sizeable chunk off the lease liabilities and therefore the Net Debt.

"You have sung the same tune for a long time now while the SP has continued downwards."

Indeed, the low share price is a gift as far as I'm concerned, I'll just top up every opportunity while the price is depressed. Just because the share price is up and down doesn't make me wrong and, in the meantime, I'm pulling in divi's and reinvesting as I go. 2026 and 2030 are my focus; 2026 the FTTP rollout will be all but complete, PSTN will be gone, and around 2030'ish the sale and Leaseback agreement with Telereal Trillium ends and the pension issue will be consigned to history by then too. I've never been more confident about an investment, as I am about BT. With a P/E below 10 and a 6% plus dividend yield it's a no brainer as far as I'm concerned.
You have your opinion, I've just explained mine, we'll have to agree to disagree.

"Arguably a longer term threat from Starlink"

That's totally and utterly incorrect, LEO's are no threat to FTTP. The problem with Microwave is its limited bandwidth capability and susceptibility to atmospherics like rain fade, inversion layers, etc, etc, with problems increasing as more users are added.
Your other arguments around BT's debt are also misleading, companies borrow money to invest, and BT is ploughing huge capex into 5G and FTTP. Nearly a third of the net debt is lease liabilities, so part of ongoing business expenses rather than true debt. BT can service the interest on its debt and has expanded its near future annual cost savings projection from £2 Billion to £3 Billion; Once FTTP and 5G are completed, the capex will fall through the floor, with big increases in BT's net profit and free cash flow.
FP all you're doing is echoing the naysayers in the vested interest media. Clearly BT will see a lot more cash on its books once the current rollouts are completed, anyone should be able to reason that.

BT has always been a cost cutting play, I've read some of the negative articles around todays results and they imply the old narrative that Altnets will take over the country and BT will go the way of the dodo, but BT have massive opportunities to cut operating costs to the bone once FTTP and 5G are completed. Somehow the narrative around cost savings has been twisted into something negative, I just see positives going forward.

"I don't mind going against either consensus or poor sentiment
but do not see a buy case for BT.

Outlook dire - luck to holders."

Detail your reasoning? So we can understand why. Throw away one liners are meaningless.

No doubt the threat of job cuts will focus the minds of potential strikers. BT/Openreach were always going to cull a large number of roles, with jobs around copper provision/repair and PSTN the most targeted imo. I thought the results were pretty good, but the market writes its own narrative. Shakeout's, like this, will simply give me more stock as I reinvest future dividends as they become available, and BT is currently where I'm looking at topping up with these prices.

"Fleccy,
Why would you expect dividend increases to be only added to the final?
Other companies add them to interims and BT have done the same in the past."

I wasn't clear in what I was saying. Last year BT restarted the dividend, stating they'd increase the interim dividends annually by 30% of the previous full year's dividends; Since they were starting from scratch, they must have decided that in the first year they'd issue 2.31p with a final of 5.39p totaling 7.7p. Clearly 30% of 7.7p is 2.31p, so that fixed this year's interim at 30% of last year's dividend total. In all likely hood they'll increase the next Final Dividend by whatever they decide, with 30% of the increase plus 5.39 added to next year's interim. As long as they maintain that policy, the interim will always be 30% of the previous full year dividends, so an increase in next year's interim is dependent on BT increasing the next Final dividend. Clear as mud?

"( Dividend has not been increased to match inflation, therefore its buying power is 10%+ less than the last Interim of the same amount)"

The dividend is exactly in line with their previous statements, relating to dividend policy for interim being 30% of the previous FY dividend, 30% of 7.7p is 2.31p. In line with their stated progressive dividend policy, I'd expect any increases in yearly dividend will always be added to the Final dividend, not the interim.

Pension deficit doesn't look too bad.

"Gross IAS 19 deficit of £1.7bn, up from £1.1bn at 31 March 2022 mainly due to the impact of higher real gilt yields partly offset by deficit contributions; BT Pension Scheme roll-forward funding deficit was £4.4bn at end of June 2022, and not adversely impacted by gilt market volatility in late September"

"How large is BT’s pension liability?"

The Liability alone isn't the most important figure, it's the difference between the value of the Assets in relation to the liabilities i.e., the deficit/surplus. The recently signed off BTPS accounts put the deficit at £4.376 Billion as of the 30th of June 2022. The accounts state the liabilities were £51.28 Billion on the 30th June 2022 and assets were £46.90 Billion. The Accounts were published in the last month, and they added the following statement:
"27. Subsequent events
Following the year-end, there was a significant fall in the value of the Scheme’s assets, during a period of significant market volatility in the second half of September. Prior to the Bank of England’s gilt market intervention, there was an estimated £11bn fall in the value of the Scheme’s assets. Our hedges have continued perform as expected, and up to the date of signing there has been no worsening in our estimated funding position."

As far as the valuation of Liabilities and Assets today, there's no way of knowing, but it's likely the deficit is probably similar to the figure reported for the end of June.

https://www.btps.co.uk/MediaArchive/SchemeSite/BTPS_Report_and%20Accounts_at_30_June_2022%20(web).pdf

I'm not sure if I'm imagining it, but I'm detecting hints of a change in sentiment toward Telecoms. It isn't just the Equinox 2 story, analysts in the media seem to be showing slightly more positivity for the sector. I have a feeling the tide is turning for Telecom stocks.

"Well done Fleccy, you always said the TT deal to VM wouldn’t happen."

I never believed the story from the start and saying the cost-of-living crisis scuppered the deal is pure fantasy in my opinion. I could never see the logic, or the financing, behind a Talk Talk takeover by VMO2, so I remain of the opinion that there never was going to be a deal in the first place. The story likely achieved its goal though, by knocking 6 or 7% off BT's share price.