Member Info for fleccy

"There are many, many great companies for shareholders out there & VOD simply isn't one of them."

I used to work for VOD, so I probably know them better than most on here, I'll make my own decisions. I think Telecoms is being undeservedly punished as a sector, I believe it will be seen as a must hold sector in years to come.

"I guess my point is that:
-at 7.7p that's 4.5% of the total share based. If some shareholders decides to dividend reinvest then it'll convert at a lower base and with compounding it'll dillute the share based and will have impact on price and dividend appreciation."

You'll have to clarify that Deepdive, I don't understand what you're saying.

"BT is at this situation because they have been borrowing money to pay dividends for a very long time"

That is clearly incorrect, earnings easily cover dividends. If BT do increase debt, it's more to do with increased capital expenditure due to FTTP and 5G rollout. BT will also do well from the Tax Super Deduction, in the Half Year Results they stated:

"Now expect around £5bn of carried forward tax losses from FY23 as a greater proportion of capex qualify for Government's cash tax super-deduction"

"Haha are you on the Wacky Backy Fleccy !!!"

We'll see, I'm betting VOD is going to be considerably higher by next January. If you're still around then, I'll let you know how much I'm in profit.

"Must be time for the last 30min decline now . !!!!!! Like clockwork . You keep believing Daniel !!!!!"

Pretty clear that VOD is being held down, by big market participants with vested interests. I'm lining up another top up in the next month, if the price remains around current levels. Before VOD anounced the sale of their stake in Verizon Wireless, for $130 Billion, they were sitting around £1.60; Following the anouncement, subsequent sale, and 6 for 11 share consolidation, the price jumped to more than £2.40, so there's no reason why they couldn't get to at least £1.60, but more likely £2 plus.

"Would have been perfectly ok if BT did not pay any dividends and use it for capex growth, lowering debt or stock buyback instead. Paying out dividends is irresponsible at this point in time however at least it's only 2.3p."

You're forgetting that the 5.4p Dividend due in the summer, but that's beside the point.

BT has confirmed it has slashed costs by £1 billion, significantly ahead of schedule:
BT says cost of adding homes to new network has dropped 15%.
BT will benefit from the Government Tax Seduction.
One third of the Debt is lease liabilities.

I could go on, but I think I've made my point. If they can afford the Dividend, then why not> Some investors rely on the income, incidently I'm not one of them.

"I wonder if drahi reinvests his dividend of 2.3p paid in feb, that will be a ok amount of shares."

It will be around £41 Million.

"Shows the closing price without the drop as does LSE. Google sometimes fixes its price on a rogue late trade
PrettyGreen."

It was an Off Book Trade, and has absolutely no effect on the actual closing price. It went through as a TNCP-ACTX, so it was a Non Price Forming Transaction, with an Agency Cross Trade indicator, where the transaction involves an investment advisor acting as the broker for both their client, and the other party. Going off the price, it was reported after the close, but took place earlier in the day.

"M&A set to change Europe’s digital comms landscape in 2022"

https://www.telecomtv.com/content/access-evolution/m-a-set-to-change-europe-s-digital-comms-landscape-in-2022-43276/

"Hopefully we won ‘t see the usual fall from midday and will actually finish up ."

Nothing should surprise in the current markets. There's something amiss in the way On Exchange algo's, and Off Exchange trades dictate the pricing of individual stocks and sectors. IAG and EZJ up nearly 10% today, which is unbelievable considering the amount of Debt Covid has placed on them. With Telecom stocks also taking a massive hit on the back of Covid sentiment, but not seeing the same recovery on the current positive sentiment, which should be all the more suprising since Telecom stocks weren't Financially impacted, in a significant way, by the virus.
Telecom stocks are being held down, in my opinion, as there's no logical reason for the current sector performance, in the meantime various players are possibly accumulating stock in the background.

" I can't however see how the closing of the options will effect the share price though. Perhaps fleccy will help me out yet again?"

I don't understand options myself. A Call option is a bet that the share price will go higher, and a put is a bet that the share price will drop. Since VOD have taken out both Put and Call options, I couldn't see the overall share price being greatly affected. The put options should be doing well, and the call options very badly. The Put options were "to decrease the cost of entering into the call options."

"Surely that would be insider trading & illegal? Can anybody advise me on that? Fleccy or mole perhaps?"

Daniel, when VOD anounced the MCB's, they put in place a mechanism to mitigate against the share price rising, as it turns out the share price has gone the other way.

"Vodafone expects to enter into an option strategy consisting of (i) call options to hedge against any potential increase of the share price of the Ordinary Shares; and (ii) corresponding put options to decrease the cost of entering into the call options. Such options would be expected (subject to limited exceptions) to have scheduled exercise dates on 125 consecutive trading days beginning three days after the delivery of Ordinary Shares pursuant to a conversion of the relevant tranche of Bonds referencing the arithmetic average of the daily volume-weighted average prices of an Ordinary Share on the LSE, BATS, Chi-X or any other exchange determined at the relevant time. It is anticipated that any Joint Bookrunners entering into the option strategy with Vodafone and/or their respective affiliates will enter into transactions to hedge their respective positions under the call and put options described above, which may include transactions to be conducted during the share reference period for the determination of the initial Conversion Price, as well as subscribing for a proportion of the Bonds themselves as described above."

https://www.lse.co.uk/rns/VOD/intended-issuance-of-mandatory-convertible-bonds-6i6o9p7ktzh3ajp.html

"Fleccy and mole-man having read all the technical stuff, can I ask you both a question, do you think the share price will increase to around 140-150 ish"

I assume you mean 2022, I have no idea what the share price will do in 2022. My personal view is that VOD is easily worth more £2, but when that price will be reached, I couldn't say.

"If the consistency continues dec 2023 it will be around 85P. Dont knock just follow the history"

The disclamer, " Information on past performance is not a reliable indicator for future performance", works both ways.

"Because I feel you are trying to make it into some sort of magic money that comes free to owners. There is no difference between issuing treasury shares or new shares. The holder gets diluted exactly the same."

It depends what your definition for dilution is. My definition would be that dilution occurs if there is more issued stock after the MCB's are satisfied than there was before issuance, which in this case I'm assuming there wont be, since the MCB's will be satisfied from bought back stock, rather than new share creation. Net Debt will increase in the short term, as the share buybacks will need to be financed from FCF, new debt, etc, but I don't class that as dillution.
Mole_man, I'd be happy to read your detailed explanation as to how the MCB's will dilute Vodafone stock, if they're satisfied from shares bought on the markets?

"Just as there is no difference in the end between issuing shares and buying them back, or just paying off a bond in the first place.
It’s all part of the accounting dance that VOD now has to do to wiggle rounds it’s debt pile which it can’t pay down."

You mean choose not to pay down. If they wanted to pay down the debt, they could sell assets, stop the dividend, and divert much of the Free Cash Flow into paying down the debt, but they choose not too. If Vodafone stays around the current level, I'm looking at ploughing a further £10,000 into topping up my VOD holding, as well as re-investing dividends from current holdings into VOD stock. Personally I see VOD as having the best value of all my current holdings. As far as Vodafone dividend policy, my personal view is that I'd rather they suspend the dividend and use it to reduce the debt, but I trust they know what they're doing, so I'll just keep re-investing the Dividends for now.

"Holding shares or issueing shares from treasury does not prevent dilution fleccy. Treasury is just a place on the balance sheet to store mostly bought back stock that has not been cancelled yet."

You're correct, but why didn't you add that Vodafone are using the share buybacks to satisfy the conversion of the MCB's into shares:

"Subordinated Mandatory Convertible Bonds; ISIN XS1960588850) matured on 12 March 2021, and the second tranche of which is due to mature in March 2022. In order to satisfy the conversion of the first tranche of the MCB, 1,426,710,898 shares were issued from existing shares held in treasury."

Notice the sentence stating "In order to satisfy the conversion of the first tranche of the MCB, 1,426,710,898 shares were issued from existing shares held in treasury"; So Vodafone are ensuring that the MCB's are satisfied from existing shares, and not from newly created stock, therefore there's no dilution in this case.
Moleman, If you're going to present a general view, you should explain Vodafone's motives behind the share buybacks, and the end result, not the general case. At no point have I suggested Vodafone are buying shares to cancel, they are buying the stock to prevent further dilution as a result of the MCB's.

"There are no benefits to having treasury stock as they do not have voting rights or pay out any distributions."

In this particular case, it's being used to prevent dilution due to share issuance as a result of the MCB's.

"In March 2019, Vodafone Group Plc ('Vodafone') issued a two-tranche mandatory convertible bond ('MCB'), the first tranche of which (£1,720,000,000 1.20 per cent. Subordinated Mandatory Convertible Bonds; ISIN XS1960588850) matured on 12 March 2021, and the second tranche of which is due to mature in March 2022. In order to satisfy the conversion of the first tranche of the MCB, 1,426,710,898 shares were issued from existing shares held in treasury. Vodafone today announces it will commence a new irrevocable and non-discretionary share buy-back programme on 22 March 2021 (the 'Programme'). The sole purpose of the Programme is to reduce the issued share capital of Vodafone to partially offset the increase in the issued share capital as a result of the maturing of the first tranche of the MCB."

https://www.lse.co.uk/rns/VOD/share-buyback-programme-a6yke46pbmn0q2x.html

"Vodafone intends to hold the purchased shares in treasury. Following the purchase of these shares, Vodafone holds 1,644,941,219 of its ordinary shares in treasury and has 27,172,686,649 ordinary shares in issue (excluding treasury shares)."

https://www.lse.co.uk/rns/VOD/transaction-in-own-shares-j0y9nr3cvavawui.html

The short term performance isn't that important in the long term, but it does allow Vodafone to buyback shares ot satisfy the MCB's.

"In March 2019, Vodafone Group Plc ('Vodafone') issued a two-tranche mandatory convertible bond ('MCB'), the first tranche of which (£1,720,000,000 1.20 per cent. Subordinated Mandatory Convertible Bonds; ISIN XS1960588850) matures today, 12 March 2021, and the second tranche of which is due to mature in March 2022. In order to satisfy the conversion of the first tranche of the MCB, 1,426,710,898 shares will be issued from treasury today at a conversion price of £1.2055. This reflects the conversion price at issue (£1.3505) adjusted for the pound sterling equivalent of aggregate dividends paid in August 2019, February 2020, August 2020 and February 2021."

https://www.lse.co.uk/rns/VOD/mandatory-convertible-bond-assocd-share-buyback-bgn8tesvf3fde4o.html

"Vodafone has given irrevocable and non-discretionary instructions to Morgan Stanley & Co. International plc ('Morgan Stanley') in relation to the New Programme, which will commence on 19 May 2021 and will end no later than 23 July 2021"

"The number of ordinary shares permitted to be purchased by Vodafone, pursuant to the authority granted by the shareholders at the Annual General Meeting of Vodafone on 28 July 2020 (the '2020 AGM'), is 2,677,388,122 ordinary shares. The number of ordinary shares to be purchased under the New Programme will not exceed 268,237,246 ordinary shares and is therefore, together with the Programme, within the 2020 AGM approved limit."

https://www.lse.co.uk/rns/VOD/share-buyback-programme-0ri7pxgsj5tknd7.html

"Vodafone has given irrevocable and non-discretionary instructions to Goldman Sachs International ('Goldman Sachs') in relation to the New Programme, which will commence on 26 July 2021 and will end no later than 17 November 2021"

"The number of ordinary shares to be purchased under the New Programme will not exceed 467,988,432 ordinary shares and is therefore, together with the Programmes, within the 2020 AGM approved limit. The purchased shares will be held as treasury shares. The maximum amount allocated to the New Programme is £570 million (considering money received or paid under the accompanying option structure)."

https://www.lse.co.uk/rns/VOD/share-buyback-programme-3ymlcuofhfw404f.html

"in relation to the New Programme, which will commence on 18 November 2021 and will end no later than 8 March 2022 (the 'Designated Period')."

"The number of ordinary shares to be purchased under the New Programme will not exceed 433,662,325 ordinary shares and is therefore within the 2021 AGM approved limit. The purchased shares will be held as treasury shares. The maximum amount allocated to the New Programme is £540 million (considering money received or paid under the accompanying option structure)."

https://www.lse.co.uk/rns/VOD/share-buyback-programme-vbyy5t1hpkw7zx3.html