Member Info for fleccy

Mikey, if you'd sang it 1.20 would have held.

https://www.youtube.com/watch?v=DZGINaRUEkU

Should have called Yoda.

"I think selling BT Sports and any non-core International assets and working on the break up of Openreach"

The selling of BT sports is insignificant in the long term, completely spinning off Openreach would be a difficult decision for BT.
Openreach generated full year Revenue of £5.244 Billion, but £2.757 is listed as internal. I'm not sure if internal refers to revenue generated between Openreach and Group, but you can bet a significant amount of revenue comes from BT to finance Fibre rollout and payments from BT's Consumer division. Currently Openreach also maintain the copper network, which requires a lot more maintenance than an all Fibre GPON network, I expect Openreach stand alone revenue and costs to significantly drop, once the Fibre network is fully operational and the copper network retired.
Openreach only manages the access network, but doesn't own the ducts, poles, wayleaves, and Fibre, which is owned by BT Group. Any purchaser of Openreach is basically buying a workforce, with a guaranteed revenue stream from offering 3rd party services to BT, and other providers utilising BT infrastructure. Other vested interests, have previously tried to persuade OFCOM into forcing BT to hive off its access infrastructure into a separate company, but I can't see that happening.
Selling BT sport is an easy decision, selling Openreach is a complex decision with lots of accounting for future variables.

Definitely a Telecom man

https://gb.wallmine.com/people/63794/patrick-drahi

"Patrick Drahi serves as Chairman of the Board of the Company. Mr. Drahi is president of the board of Altice Europe. Mr. Drahi is a graduate from the Ecole Polytechnique and Ecole Nationale Supérieure de Télécommunications and began his professional career with the Philips Group in 1988 where he was in charge of international marketing (UK, Ireland, Scandinavia, Asia) in satellite and cable TV (DTH, CATV, MMDS). In 1991, Mr. Drahi joined the US/Scandinavian group Kinnevik-Millisat, where he was in charge of the development of private cable networks in Spain and France and was involved in the launch of commercial TV stations in Eastern Europe. In 1993, Mr. Drahi founded CMA, a consulting firm specialized in telecommunications and media, which was awarded a mandate from BCTV for the implementation of Beijing’s full service cable network. In addition, Mr. Drahi founded two cable companies, Sud Câble Services (1994) and Médiaréseaux (1995), where he was involved in several network deployments and buy-outs. When Médiaréseaux was taken over by UPC at the end of 1999, Mr. Drahi advised UPC on its M&A activities until mid-2001. Mr. Patrick Drahi is the father of Mr. David Drahi. Mr. Drahi’s qualifications to sit on our Board include his substantial experience in the areas of corporate strategy, operations, finance and telecommunications."

"It made clear Drahi's expertise lies not in telecoms but in financial chicanery"

That isn't quite right, he has a post-graduate degree in optics and electronics from the Ecole Polytechnique and Ecole Nationale Supérieure de Télécommunications de Paris. I would suggest his interest in Telecommunications is due to his Engineering roots. He is likely both Technically and Financially savvy, and is often described a "telecoms billionaire".

"I think the price was adjusted from 135p to 120p in view of the dividends that were paid to the bondholders over the period....that is common practice"

Either way, i'd guess it's a positive for VOD, since they're currently buying back shares at sub £1.20.

"Sold half this morning."

Hahahahaha, sorry. Of course you did, since half of zero is zero, you now hold half as many shares as you held previously, i.e. zero.

"They did make those mark to market gains on options due to the SP being higher than the strike price at year end. Presumably though they have options to cover the 2022 convertible bonds at a similar strike, so will most likely make mark to market losses if SP remains this low, which is currently below the bonds conversion price."

Mole_Man
These aren't standard convertible bonds, they are MCB's:

"A more relaxed attitude to risk
With a traditional convertible bond, the holder gains if the shares go up in price because they can choose to convert to equity.
And if the shares do not go up in price, the holder does not mind as they still own a bond, with the security that entails, and thus can reasonably hope to see their money back, plus interest at the end of its term.
To put it another way, that is ‘heads you win, tails you don’t lose’.
With the mandatory version, however, that conversion to equity is coming regardless of whether it suits the bondholder – the conversion may happen even if the market share price is far below the conversion price - meaning they have lost that ‘heads you win, tails you don’t lose’ assurance in return for a limited pick-up in yield compared with a traditional convertible.
And presumably the only reason you would do that as an investor is if you were confident about the future and you still thought shares prices were more likely to rise than fall."

https://www.schroders.com/en/uk/the-value-perspective/blog/all-blogs/this-bond-with-a-twist-is-sending-a-worrying-message-on-risk/

I'm probably wrong, as I'm from an Engineering background, but since the conversion price at issue was £1.3505, and the first tranche of 1,426,710,898 shares were issued from treasury at a conversion price of £1.2055, then this is bad for the investor and good for Vodafone, hence the current buybacks.

This might be of interest to some.

https://www.macroaxis.com/invest/bond/VOD

Larry, I saw that article earlier today, but I stopped reading when he suggested Vodafone buying BT. OFCOM would immediately block any merger, between BT and Vodafone, for two good reasons; The first reason is Vodafone's takeover of Cable & Wireless Worldwide in 2012, and the second is BT's ownership of EE.

Mesh, I wholeheartedly agree with everything you just posted apart from calling me Fleecy lol. Although I'd never heard of the "Nash equilibrium strategy", until I read your post, my strategy would fall within that classification. I'm invested in three stocks, with a topping up strategy where I see the most value across the three. There's an argument that I'm not diversified enough, and I'm guilty of putting too many eggs in too few baskets, but I have faith in my initial investments so I have confidence as I add more stock purchases.
I suppose I see the game as the market mispricing my investments, as I continue to bet more that their prices will recover, so I'm just filling my boots while the market takes an opposing view. In some respects I see the Pandemic as an opportunity, and since I believe in the companies I'm invested in, I've decided wont look this Gift Horse in the mouth.

"Whether the share price drops or not isnt the issue...the issue is whether doing it is better for the business in the mid term as a result of getting the balance sheet in better shape"

Pokerchips, I've often wondered myself why Vodafone allow so much debt onto their balance sheet, and my only conclusion is that they want to; I can only guess as to the the reasons why, it could be some sort of poison pill against takeovers, since standard poison pill defences are restricted under the UK Code on Takeovers and Mergers, or it could be they see growth as more important than being highly leveraged, your guess is as good as mine.
Nick Read isn't a Telecom man, he's a qualified accountant with much of his career in CFO positions, so he understands Finance better than we do. Vodafone also employ an army of accountants across the varied businesses, forming the Group, so they likely know what they're doing. They would probably end the dividend pay-outs immediately, at the first signs of trouble borrowing through the bond markets.

"Now with the retrospective tax removed they may be able to see their stake to someone approved by the Indian government which will give a give a nice/ partial write off reversal"

I don't see that to be honest. From what I've read, VI's debt is AGR dues and spectrum costs. The Retrospective Tax case was between Vodafone PLC and the Indian Government, so doesn't change anything for VI as far as I can tell. The Indian Government has backtracked on retrospective tax, not to help Vodafone, but because Cairn has been claiming Indian Government assets to retrieve the arbitration award. As you say it appears Vodafone have washed their hands of VI, which the Indian Government probably didn't expect. From an outsider perspective, it looks as though the Indian Government put the squeeze on Vodafone, thinking they'd plough whatever funds maybe required into VI to keep it afloat, but it looks as though Vodafone have just walked away.

"But oh Fleccy, had you said best used for - and then the list you mentioned, I would have read and moved on, but you said "Only really matter for..."
Not true! For years I've been saying BT's downtrend was "Oak-like strong in it's descent""

Here's the thing Velo, Oak tree's can be cut down, and "trends" can turn on a penny, so anyone can get caught out. In reference to my comment about trends not mattering to long term traders, I don't believe it does. Quite often the LTI will see a share price declining and then watch it stabilise for a while, or start modestly increasing before buying; Usually they will be of the mindset that they've invested at a good price and are happy with their purchase. If the stock subsequently starts to fall again, and they're locked in, they could sell at a loss but their mindset was to invest for the long term, so they tend to top up rather than selling out. I originally invested in BT at around £3, my average is now 196p, and since I can hold forever, I can outlast market sentiment as long as necessary. Even when BT was sub £1, I never for a minute doubted my investment, which is why I added a considerable amount at 106 p and 112p. My timing may have been way off on my original investments, but I'm 100% confident I'll make a good profit at some point in the not too distant future, should I decide to sell. Telecom stocks are a no brainer investment imo, at some point they'll become must have holding in portfolio's, much safer than an investment in 5h1tc01n.

"Vodafone Telefonica and BT,
with them you have to look at the fact that they have assets tucked away within the huge size of the company"

My take is that the Market is purposely undervaluing Telecom stocks. I've pointed out previously, that the current moves to FTTP and 5G will be the last major Telecom Network and Infrastructure upgrade for generations. I've worked with FDM, PDH, SDH, DWDM, IP Routers and Switches, in various roles over the years. I've watched the Networks evolve to their current state, and I don't see where they can go, once the current upgrades are complete, apart from slow improvements to the technology. The market narrative, currently being projected, is that the Telecom providers will have to refresh their networks every 10 years and are therefore a bad investment; What I see is an industry reaching the limit of technological evolution, so slow improvements in tech and applications will drive small future changes, not massive upgrades. It's the reason the likes of Goldman Sachs have decided to invest through CityFibre in Fibre and PON, and VM/O2 are abandoning any future plans to upgrade to DOCSIS 4, moving instead to a PON model.

Still on the theme of "downtrends", if you look at a 5 year chart comparing Vodafone Telefonica and BT, they are all showing a similar performance. 5 years ago BT was sitting around 400p , Vodafone 238p. Telefonica hit €10.6 in March 2017 before steadily declining to the current price of €4.09. My point is that BT might look terrible, but the sector has performed terribly with BT being one of many affected stocks. I believe the Telecom sector is overdue a trend reversal, and the current negative sector narrative is changing. Just my opinion, but i'll finish with the usual caveat DYOR.

https://www.google.com/finance/quote/VOD:LON?sa=X&ved=2ahUKEwj84bv8457yAhXIfMAKHX2BDHUQ_AUoAXoECAEQAw&window=5Y&comparison=LON%3ABT.A%2CBME%3ATEF

"If you are of the belief that the trend in these and others "didnt matter" ..then you would NEVER achieve the most shares for your money...in fact the opposite"

I wouldn't classify the Pandemic as a trend, it's a historic macro event which will go down in history. The market doesn't appear capable of determining how to value stocks during the Pandemic, so it's punished Telecom stocks along with the Airlines. On the 20th December 2019, BT was 204.5p and dropped to below £1 in September 2020, even though the impact on Telecom stocks were miniscule compared to the Airlines, so this is a classic case of the market mispricing a Macro event. As it was I didn't hit the lows, but the drop allowed me to purchase a significant amount of BT stock at 106p and 112p. BT's trend has been downward since early 2016, after a significant uptrend starting in 2009. With a crystal ball, someone could have traded the up and down days in the midst of the trend, but losses would likely dent the the profits on the good days, averaging down any possible gains over time. From what I've read, most retail day traders lose overall as the deck's stacked in favour of the house.
I wouldn't use the phrase tidal wave, but I'm expecting a big inflow of foreign investment into UK stocks, once Brexit and Covid are memories. I'm just filling my boots now while the market isn't looking, time will tell if i'm right.

"BT raids Asos to appoint Adam Crozier as new chairman"

https://www.thetimes.co.uk/article/bt-raids-asos-to-appoint-adam-crozier-as-new-chairman-qcdvm66vk

Trends only really matter if you're a Day Trader, or someone with a limited time window and a need to release capital. I only invest in companies I have complete faith in, and I ignore the market view after I make my purchase. Because of my belief in the strength of my investment choices, It also allows me to ignore any media narratives.
I definitely fall in the topping up camp. I now hold 77,569 BT shares, with an average buy price of 196p, Vodafone 61,537 with an average buy price of 153,9, and 244,308 Lloyds with an average buy price of 50.8p, and we're currently in the red across the board. The pandemic has allowed me to top up and reduce my average buy prices dramatically, and I'm confident I'll be in the black, across the board, within a year from now not withstanding some catastrophic macro event. I'm planning another top up next week, so one of my averages will come down even more, currently I'm swaying toward VOD, since the stock is showing the lowest price recovery of the three. Irrespective of pullbacks, I'm pretty sure that BT will sit get back to £3, Vod £2, and Lloyds 70p, which would eventually yield a profit approaching £160,000, should I decide to sell. I don't see those figures as particularly speculative, from a historic perspective, and that profit figure doesn't include dividends I'm yet to bank. I could be wrong, and my investments may underperform forever, but the odds are against that, since BT and Vodafone would both become likely takeover targets should they underperform going forward.

"Fleccy, there's a misconception at the heart of your calcs. You've taken £446m net profit as if it was this year's net profit before the one-off tax charge."

I must admit that I didn't notice the Q1 21 figure, and read the £446 M figure as the one off tax charge, so admittedly my figure is wrong, but I would think close enough to make little difference, since EBITDA is up for the quarter.