Member Info for fleccy

"Admittedly, it’s exceptionally difficult to make money on any stock belonging to an index that trades at a 40/45 discount to normal stock markets"

Which makes it a fantastic index for Dividend/Income investors like me.

Beo I'm not an accountant so hopefully you can explain something to me, Dividends aren't accounted for as a component of Free Cash Flow in their Cash Flow statement, it comes afterward as part of the final Net Debt calculation. Admittedly Free Cash Flow shows as a loss, but their Net Debt has reduced against H1 2024; Also Vodafone's H1 FCF always comes in negative due to the way they report Working Capital, -€2.636 Billion currently, which should be added back in at FY 2025. Is it correct to say the dividend isn't covered?

You probably understand the figures better than I do, so I'd be grateful if you could breakdown the figures, referred to in your last post, to help me understand.

"Accumulated losses increased by a billion. It’s the one place in the accounts you can’t hide the facts"

Mole_man are you referring to depreciation and amortisation of owned assets? Because many companies in many industries write down the value of their assets for tax purposes; If not that, what was you referring to?

"Bitcoin doesn't care what you think either Fleecy. Smashed through £61k last night and no signs of stopping any time soon.

It's impossible to be more wrong about something than you are right now."

Zesty how do you know I'm wrong about Bitcoin? Like the Emperors new clothes, eventually it'll be seen for the mirage it is, and the losers will wonder why they believed the hype; It could be next year, or in 10 years, but at some point it'll collapse.

By all means fill your boots with Bitcoin tokens, but in my opinion the token will eventually find a valuation based on its fundamentals rather than hype and speculation. I don't see any fundamental value in Bitcoin tokens, or the BTC blockchain, I mean what does it do? You can't run a car or power machinery with it, you can't eat it, all you can do is gamble with it. As a method of transacting it isn't that great, it's an inefficient and energy intensive Blockchain where miners rely on an ever increasing token price, following each halving, to cover their operating costs and realise a profit; Without an ever increasing Bitcoin price, transaction charges would have to increase to fill the gap.

It's not beyond the realm of possibility, that the current hype around ETF's and Trump, is being engineered to provide an off ramp for the well connected Whales who've bet big on Bitcoin.

All this talk about Trump somehow turning Bitcoin into a Treasury Reserve Asset is pure fantasy, for a start he wouldn't have the power to do such a thing and secondly anyone with any sense can see there's no intrinsic value in an algorithmically generated blockchain token. I believe Central Banks have been accruing Gold, if they wanted Crypto Token's they could just create their own. It doesn't matter if Bitcoin goes to $100,000 or $1,000,000 it doesn't change the fact that it's only use is as a gambling chip.

It's called a funding deficit, not a shortfall.

Suggesting that BT might not survive is misguided in my opinion, I don't see any circumstance where they wouldn't be here decades from now. Tell me the scenario that'll lead to BT ceasing to trade? The takeover narrative is highly unlikely, since the government have already threatened potential bidders under the National Security and Investment Act; No Foreign based entity would be allowed to even build a controlling stake in BT, Drahi was warned off and I expect Government officials have quietly told Bharti to limit their holdings to around the current 24% too.

I don't know why my well telegraphed narrative annoys you, I've been consistent and explained in detail why I believe BT is a worthwhile investment. In a nutshell BT are a cost cutting play, with growth in the bottom line and FCF; I've also repeatedly stated that BT's revenue will likely decline over the coming years, mainly due to regulation holding down BT/Openreach's wholesale pricing. I could be wrong about BT, but everything seems to be rolling out pretty much as I expected and have been saying for years.

Thanks Nige

Fibrelad, what role did you have in BT? The reason I ask is because I also worked in telecoms for over 30 years. I joined Mercury in the 80's and was there as the Mercury brand was replaced with the parent Cable & Wireless brand, I saw them acquire various cable companies and then sell them; I was there when they split into Worldwide and Communications, and I worked for Cable & Wireless Worldwide when Vodafone took us over.

I've seen close up how difficult it is for smaller scale players to compete against BT, and I've heard all the same narratives replayed over the last 30 years, about how the competition will steal BT's lunch, but BT always seems to do Ok and the competition falls away; I don't see it being any different this time around.

As pointed out previously, by me and others, BT's assets are worth far more than their current market cap plus debt, so I don't see why BT stock shouldn't be viewed as a bargain basement buy at current levels. What I'm saying isn't a recommendation, it's my opinion, everyone should do their own research and form their own conclusions.

There aren't many stocks where a single retail investor can move the price, but QBT appears to be one of them. For around the same price as having a 5kw solar system installed on a domestic property, you could purchase a million shares in QBT. If someone bought a million shares as a single buy, you can guarantee it would push QBT's share price up; Of course the true is same in reverse, where selling a million shares would almost certainly push the price down.

For retail investors with millions of shares who may want out, the only way they could do it is to drip feed their sells. Unless QBT's number of daily trade's and traded volume's increase dramatically, it would be really easy for a retail investor to be locked in.

I'm not sure if some who comment on here even understand how BT is structured and how much revenue the various component parts generate.

Consumer

"The Consumer arm of BT has over 25 million subscribers, and more than 450 stores on the high street, making us the largest provider of consumer mobile and fixed broadband communications services in the UK. Three brands sit under our Consumer division: Our flagship Consumer brand is EE, together with BT and Plusnet"

Business

"We aim to be the most trusted provider of secure connectivity and collaboration in the UK and internationally. We’re a powerhouse for business and government: investing and simplifying on behalf of our customers, helping them transition from the old to the new and driving the digital economy"

Digital

"Our internal Digital unit is responsible for leading BT Group’s digital transformation, driving experience innovation and delivering the products and services our customers need to support their own goals"

Networks

"Our internal Networks unit is responsible for designing, building and running the networks and technology platforms that BT Group, and our customers, rely on"

Openreach

"Even though Openreach is a separate company, it’s still part of our BT Group. And it’s job is to keep the UK’s fixed connectivity network in tip-top condition. Openreach connect our homes, mobile phone masts, schools, hospitals, broadcasters, and businesses of all shapes and sizes. It helps to create the best possible network with the highest quality service, for everybody"

Revenue FY25 H1

Consumer 4.836 Billion

Business 3.865 Billion

Openreach 3.118 Billion

£1.612 Billion of the Openreach £3.118 Billion revenue is reported as internal, which I assume is money Openreach is paid by BT Consumer and Business for providing services. Consumer generates the most revenue, but Openreach generates the most EBITDA.

EBITDA FY25 H1

Consumer 1.330 Billion

Business 747 Million

Openreach 2.059 Billion

How do they know?

Can't read that, it's behind the paywall. The headline just echo's what's been said in previous articles on the same subject.

"Bt is in a tough spot right now as both of their revenue streams are falling"

Mesh I'm heavily invested in both BT and Vodafone. BT's business model is much simpler than Vodafone's, so BT's investment case is a lot easier to understand. BT's revenue is falling due to regulation, OFCOM are dictating BT's wholesale pricing to give ISP's and alternative providers a leg up. If BT was left to compete unhindered it could destroy the competition in less than a year, the ALTNET's and the ISP's know this. The market pushes the narrative that BT is a dinosaur, implying that the much nimbler ALTNET's will eat BT's lunch, but the competition all lack the scale to compete with BT in a truly competitive environment. BT's CAPEX is already tailing off and Openreach is adding FTTP customers at a much higher rate than the ALTNETS. BT is a bottom line Net Profit and increased Cash flow play, BT's revenue was always going to drop while OFCOM have a foot on BT's neck, but things like the Exchange closure program, convergence and staff reductions will show through on the bottom line over the next 5 years.

Just logged in and had to a do a double take, I thought I'd opened up the Lloyds chat page by mistake 😲

PRK BT isn't an AIM stock, it's a FTSE Blue Chip stock. The debt is a mixture of Financial Debt and Lease Liabilities, so it's a little misleading looking at the overall Net Debt figure. Openreach alone is worth well more than BT's overall financial debt, so the current market cap for BT is massively undervaluing BT's combined business portfolio.

Well PRK and Savage, we're pulling in over £25,000 a year in tax free dividends. Every time my chosen stocks drop, the top up's increase our annual income. Previous dividend reductions have lead to stock price weakness and more opportunities to top up with even more stock at cheaper prices. In the end you don't live on paper gains, until you sell and realise a capital gain, a paper loss isn't a capital loss until you sell, but dividends give you a choice between income and reinvestment, with potential compounded increases in dividend income with each reinvestment.

Well the market's clearly wrong Savage. The market is driven by narratives rather than fundamentals. I'm happy to keep taking dividends and topping up on share price weakness, because I can see light at the tunnel. If you look back through my BT posting history you'll see that I've been saying as much since 2020, my opinion hasn't changed. BT is a far safer bet than RR in my opinion, which explains why Telecom Billionaires are mopping up BT stock at cheap prices.

Savage, BT is clearly undervalued whereas Rolls Royce is overvalued. One is primarily a manufacturer, including a servicing business, the other is purely a service provider in the midst of a high capex cycle.

Because of OFCOM, and BT having Significant Market Power, BT was always going to see revenue reduction due to regulation, but the investment case for BT is in it's ability to cut costs and grow the bottom line, when capex drops significantly in upcoming years. BT will have far fewer staff, a much smaller building footprint, a fully converged network with less energy demand and the pension scheme will be fully funded. BT will have the same network coverage with a fraction of the costs, the market knows this but wont push the narrative until there's light at the end of the tunnel.