Member Info for fleccy

LTI clearly their debt is too high, or they wouldn't tap shareholder's with a rights issue and they wouldn't sell assets to fund their plans, clearly they have to watch their debt position to protect their credit rating; As far as I'm concerned, excuses like "they plan to sell businesses to streamline the business to concentrate on transmission networks", are just spin, even your Black and white thought processes must be capable of understanding that? Clearly they're getting close to their overdraft limit and are having to find other ways to raise cash, I'm just amazed that analysts aren't hitting with a Vodafone like narrative suggesting the dividend is unaffordable at the current level, maybe they'll hit them with that one further down the road.

Just to add, Lending why are you answering for LTI? He was the one that said comparing the two companies is "ludicrous"

BT and NG share a lot of the same features, although in different sectors:

They're both heavily regulated

They're both wholesale providers, NG with its Energy supply customers and BT through Openreach providing infrastructure services to other Communication Providers

They both have Capex demands and debt

They both generate around the same revenue and EBITDA

They both pay dividends, BT reduced there's post covid but BT hasn't had a rights issue recently either.

Going off the recent results, BT has now reached peak capex whereas NG have just announced a further £60 Billion capex over the next 5 years. BT has competition, but they're in the midst of a big building closure program, PSTN switch off and convergence play that'll add hugely to the bottom line between now and 2030; NG has just diluted it's stock and is disposing of assets because it's current debt position is too high, clearly BT is a safer bet than NG from that point of view.

There's no guarantee that NG's £60bn worth of capex will significantly grow revenue, just like there's no guarantee that BT wont face stiff competition going forward, whichever stock you bet on it's speculative. What is clear is that the market players decided to trash sentiment in Telecom stocks, probably to allow private equity to swoop in and pick off infrastructure assets, like KKR buying Telecom Italia's fixed line network, or Vodafone selling Vantage towers. NG is also selling off various assets to fund it's Electricity Grid bet, which may lead to growth in revenue, but the regulators could easily crimp that dependent on the general economy and end customer's ability to pay their energy suppliers.

I could go on about the efficiency of Passive optical networks and how BT's energy bill will fall through the floor once FTTP is complete; I could also say that AI chip designs may become more power efficient, as chip manufacture moves from 3nm to 2nm and the designs get more ever power efficient over time. It isn't written in stone that businesses will require more power in years to come, that's just speculation based on current technology and unknowns.

All I'm saying is that BT is no riskier an investment than National Grid, but the market treats them very differently from a sentiment and valuation point of view.

You still haven't explained your "ludicrous" reference with respect to comparing NG and BT.

This month, Total voting rights have reduced by 334,056,172

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

https://docs.google.com/spreadsheets/d/e/2PACX-1vS0oSavIsBjHgD7k6NMyk7Z591Cm2IrevvLI-Jq95gOmESrOI0Vi_NhA8LIO9rMz90Y5zCOCoFuEItG/pubchart?oid=1451011517&format=interactive

LTI, why is comparing BT and NG completely ludicrous?

Even though one is a Telecom company and the other a power grid owner, I can think of many qualities they share as companies, albeit in their respective industries.

Why?

My post was all about NG, the fact I mentioned BT to make a point is irrelevant. If I'd been comparing Vodafone and BT, without mentioning NG, then you'd have a point. I mentioned NG 9 times in that post, so I'd suggest it was very relevant, the fact I'm not invested in NG is irrelevant. I'm sorry if me posting upsets you, you should get over it.

LTI questioned why I've been posting on here, I think the main reason is that I'm confused as to why NG is somehow valued differently than BT. If BT had a Rights Issue of 7 for 24 shares, UBS and other analysts would hammer BT's share price into the ground, yet BT is in a far stronger position financially than NG. Comparing one with the other, NG is either massively overvalued or BT is massively undervalued. For some reason the market is currently valuing NG's assets differently than they value BT's assets, for example Openreach alone is worth way more than BT's financial debt, and should BT sell Openreach a big portion of the Lease liabilities will go with it. Then there's BT(EE)'s mobile portion of the business, that BT acquired for around £12 Billion, or around BT's current market cap. In terms of BT's debt, the figure the media likes to quote in isolation is the Net Debt figure of £19.5bn, consisting of £14.5bn Financial Debt and £4.882bn lease liabilities and lease liabilities may be accounted for as debt, but in reality they're operational costs.

In terms of CAPEX, BT are heavily punished by analysts for any cash they direct into infrastructure spend, with UBS probably being their most vocal critic. Another narrative used to bash BT is the amount of regulation meted out by OFCOM, due to their SMP status, yet NG's £60 Billion infrastructure spend doesn't guarantee returns and is heavily dependent on the regulators being kind going forward.

Just because the market's being kind to NG now, doesn't mean it always will, 5 years is a long time and £60 Billion is a lot of Capex, there's no reason to suppose that NG's dividend is safe going forward, or that NG wont look to raise more capital down the road, or that the market wont change its view on NG's prospects.

Royal Mail and BT pose completely different National security priorities, it appears the Royal Mail ownership doesn't matter to the Government. The days of sending letters are numbered, so parcel delivery is where Royal Mail like companies are heading. UK politicians don't appear to place any value on national pride, so it's unlikely the UK will ever have national giants like the US has; Because they'll either regulate away any advantages of home grown companies, or they'll allow them to be taken over on the cheap. If you were to weigh up the evidence, it isn't the politicians that run the UK, it's their bosses in the city.

Anyone know why a bunch of Off Book trades went through at the Rights Issue price, after the close last night?

Date Time Trade Prc Volume Buy/Sell Bid Ask Value

30-May-24 19:08:18 645.00 3,072 Unknown* 836.80 837.20 19.81k O

30-May-24 19:08:18 645.00 3,072 Unknown* 836.80 837.20 19.81k O

30-May-24 19:08:18 645.00 150,010 Unknown* 836.80 837.20 967.56k O

30-May-24 19:08:18 645.00 150,010 Unknown* 836.80 837.20 967.56k O

30-May-24 19:08:18 645.00 63,866 Unknown* 836.80 837.20 411.94k

Jambone and Suthy now appear to be posting on GST. Not sure why they're not posting here.

I'd ignore any forward looking forecast on marketscreener, since they can't be accounting for any financial implications from the disposals of Grain LNG and NG Renewables.

An interesting article discussing the WPD deal.

https://modoenergy.com/research/some-thoughts-on-the-national-grid-wpd-deal

The Net debt has had a few ups and downs, it looks like the WPD acquisition increased debt significantly:

Year Net Debt (Billions) Acquisitions/Disposals

2015 - 2016 £25.33

2016 - 2017 £19.27 Gas Distribution sale

2017 - 2018 £23.00

2018 - 2019 £26.53

2019 - 2020 £28.59

2020 - 2021 £29.40

2021 - 2022 £44.10 WPD Acquisition+debt

2022 - 2023 £40.50 Rhode Island/Millenium disposal

2023 - 2024 £43.60 UK Gas Disposal

https://docs.google.com/spreadsheets/d/e/2PACX-1vQEWYioCX64zqjTfgCXb6s1j5LxISz79OeSG6ZUnCvOZ2qCQqIZ6cVLewcf51nyfmfKi4cWkLbATX00/pubchart?oid=146613161&format=interactive

"Announcing sale process for Grain LNG and NG Renewables" Should reduce some of the debt burden, but NG also advise:

"Continued issuance of senior debt across the Group

Expect to use hybrid debt later in 5 year framework to maintain balance sheet strength and investment flexibility"

https://www.nationalgrid.com/document/152096/download

Nothing said on here will influence the share price, I'm just expressing my personal view. People shouldn't act on anything anyone says on here.

"The similarities with the 2010 RI are there, and in real terms the size of the current is not hugely different from that in 2010"

Except their Net Debt appears to be increasing year on year. I could only go back as far as 2015/16 results on NG's historic results page, back in 2016 the Net Debt was £25.3bn.

"Net debt as at 31 March 2016 increased by £1.4bn to £25.3bn (2015: £23.9bn)"

https://www.nationalgrid.com/document/138546/download

I don't know what the Net Debt position was in 2010, but I suspect it was lower than 2015/16.

My first investment into BT was around £3, I thought it couldn't go any lower after dropping so much from around £5. Over time I saw the price drop ever lower until it eventually dropped below £1, with the financial media bashing BT for anything and everything. NG appears to be fortunate that the Wolves aren't as yet chasing it down, but that doesn't mean the market wont turn on NG at some point.

I'm cured of believing that good companies can't keep dropping to well below fair value, since the market picks and chooses it's prey, with retail heavy stocks being fair game. Rolls Royce dropped to 39p and suddenly the market, dare I say, illuminati decided to flick the switch with a new narrative. NG may well get back to over £11, but that doesn't mean it can't go a lot lower in the meantime and remain down for years, it'll be interesting to see what sort of market treatment NG gets. When it comes to the low valuations for Telecom stocks, my personal view is that their assets are being targeted by Private Equity, it appears Private Equity have now purchased some the NG's asset pie, with NG's debt who's to say they wont give NG the Telecom treatment.

Https://finance.yahoo.com/news/buried-fortune-old-copper-wire-230000978.html

"“We’ve got all of this material, sitting redundant,” said David Evans, who runs asset recovery at TXO. The firm is working with BT, and Evans says discussions are under way with more than a dozen telcos worldwide about copper recovery. “It’s an enormous commercial opportunity.”"

Interesting, it does make you wonder.