Member Info for KevRow

"There is some notion of belief that a Market Cap is some carefully worked out figure taken from a load of fundamental figures or formulas

...when in fact

..it becomes nothing more than a result of the sentiment around the day to day Trading around FOMO or FOBI "

No one is suggesting that the book value and market cap are always, or ever, equal or that the share price is always based on pure logic unaffected by sentiment.

The discussion is around if the 4 billion in cash being converted into shares and then cancelled will impact the market cap and I'd say it clearly does, as the source of the cash is from a nonrecurring source, so won't be replaced.

For those that think it won't. Why? 4 billion in cash isn't a difficult to value asset that is worth a lot when managed well or a liability when it's being mismanaged. It's just cash that will be gone.

"And there we have it KevRow, because you have just demonstrated that you are confusing market capitalization with book value. Two different things.

But you are not alone, most on here dont seem to get this."

No, I'm confused as to how you can think a business that has 4 billion in cash can then not have 4 billion in cash and be valued the same. Name dropping different methods of valuing a company doesn't explain this.

"The problem is when inexperienced posters come onto the board and spread the half truths they have read or misunderstood from elsewhere. They are so convinced they know what they are talking about when clearly they do not."

The problem is when so called "experienced" posters think that they know better than everyone else but seem to struggle to give any illustrative examples of anything they say other than to repeat it over and over as if it's self evident.

"It also clear that the MC is not affected by the buy back."

Really? How will that work? 4 billion less cash and less shares in issue might not impact the share price but how on earth will it not impact the market cap unless the market values 4 billion in cash at zero? It will be cash at this point, so no need to keep going on about "non performing assets".

"THINK AGAIN - who on earth would be investing with that sort on devaluation.

I think you will find that the market will value Vodafone on it's profitability which will not be affected negatively with the sale of non performing assets.

The market cap is likely to remain at about the same level or increase from full year results time as the benefits of the vodafone investment materialises"

As has been mentioned multiple times, no one is saying that the share buybacks will reduce the share price but there is no reason for it to material change the share price either. No one, from what I can see, are saying that the buybacks will drive down the share price, so the buybacks are no reason for them to sell. You, on the other hand, seem to be tying yourself up in knots trying to rationalise why the share price going down is a good thing for the next 12 months or so and anyone who suggests they would want the price to go up in that period is somehow missing the bigger picture that only you can appreciate.

These "non performing assets" clearly have value. 4 billion for Vodafone Spain and 8 billion for Vodafone Italy. So when that cash generated from their sale is spent, it's not money they will ever get back and it will have an impact of the market cap. Using the cash for buybacks probably won't change it much at all due to the two largely cancelling each other out.

"You have a lot to learn "

There is that phrase again. You seem to be describing a situation where a company buys back it's own shares using cash it has generated, and would be expected to generate the same cash again, rather than cash from one off assets sales.

"Kr

''Anyone who thinks that a business can cannibalise itself to buy back it's shares and somehow be worth the same at the end of it with less shares in issue needs to start engaging their brain.''

you have a lot to learn"

Everyone does. Those who think they don't tend to just be arrogant and belligerent.

"Kr

as i said -

Anyone who thinks that the Vodafone valuation is going to drop by 4 Billion euro (a large percentage of current market cap) maybe should stay clear for a couple of years."

Why? If the valuation drop is matched by a reduction in shares, it's largely zero sum. Anyone who believes that the main catalyst for an improved share price is buy backs funded by one off asset sales are probably the ones who are better off steering clear.

"Anyone who thinks that the Vodafone valuation is going to drop by 4 Billion euro (a large percentage of current market cap) maybe should stay clear for a couple of years."

Anyone who thinks that a business can cannibalise itself to buy back it's shares and somehow be worth the same at the end of it with less shares in issue needs to start engaging their brain.

"''then clearly it will be valued at less.''

why is that? - what value was the market placing on non performing assets that may have continued to deteriorate further , before a clear cash amount was offered.? "

The value is 4 billion for Vodafone Spain and 8 billion for Vodafone Italy which has now, or will be, realised through their sale. If 4 billion of the money generated as a result of that one-off sale of assets is spent on the buying back shares, you will have less shares and a company worth, give or take, 4 billion less. Combine the two together and I'm not sure it will have the much impact on the share price one way or the other.

"Buybacks have NOTHING to do with what the market values a business at (market cap). "

Perhaps not in all instances but if a business uses a few billion Euros it gained from a one off asset sale, rather than cash it generated, to buy back the shares, then clearly it will be valued at less.

When it comes to free broker ratings, "If you're not paying for the product, then you're the product" always springs to mind.

UK regulator refers Vodafone’s merger with Three for in-depth competition probe

https://www.cnbc.com/2024/04/04/uk-regulators-refer-vodafones-merger-with-three-for-in-depth-probe.html

"Berenberg raised target to78p today"

This was last week.

VODAFONE : Gets a Neutral rating from Berenberg. March 27, 2024 at 09:31 am.

Carl Murdock-Smith from Berenberg retains his Neutral opinion on the stock. The target price has been raised from GBX 75 to GBX 78.

https://www.proactiveinvestors.co.uk/companies/news/1044123/can-vodafone-face-its-german-challenges-head-on-1044123.html

Looks to be overdue now, which might be positive.

Bernstein lowers its rating from Buy to Sell. The target price remains set at GBX 65.

"Has Vodafone responded to the below? I believe the 5 days is up. Can’t find any information on this.

“The Competition and Markets Authority (CMA) on Friday gave the two companies five working days to respond with "meaningful solutions" to its concerns that the merger will result in higher prices for consumers and businesses and lower investment.”"

5 working days would mean tomorrow/Wednesday for an announcement.

"Surely you wouldn’t invest such large sums unless you were very confident of significant life changing gains.

I think 90-£1 achievable after a good update 14 may then upward from there. I’d be over the moon with £1-£1.30 this year plus dividends. No building society will beat those returns"

What sort of good results are expected to push the price up to those levels?

I suspect the directors will expect to see steady gains over the next few years if all goes according to plan. Certainly very unlikely to be expecting anything transformative in the next few months or even this year, otherwise the buys would look very dodgy. It's a good vote of confidence in their belief in the future direction over the coming years.

I expect the CMA to announce a phase 2 investigation into the Vodafone/3 merger this week, so wouldn't be surprised if the UK results echo those of 3 to hammer home their case for the merger and I don't see anything other than incremental changes from the last set of results in the hope that they will meet this years targets but happy to be surprised.

It will certainly be interesting to see where the remaining Vodafone Spain/Italy money is going to be spent.

The flip side is that the capability should hopefully provide some reassurance to the CMA that the Vodafone/3 merger still leaves consumer/businesses with options that they may not have had even a few years ago and that consolidation is no bad thing.

"Don't get me wrong, Starlink is a great niche product but can we please stop pretending it can scale to compete with Telecoms. If technology existed that allowed the scale necessary, don't you think Telecoms would be deploying it right now instead of spending billions on 5g and fibre."

Low Earth Orbit satellites look more than capable of grabbing market share in areas such as IoT etc. In mature markets where the telcos have tight margins and are starved of growth opportunities that they can monetise, it's competition, that seems to be improving leaps and bounds year on year, they could do without.

I think the merger will go through but I didn't think it would ever go through after a light touch Phase 1 investigation. It clearly raises competition concerns that will need to be addressed.

I think the deal being referred to Phase 2 was pretty much guaranteed.

https://www.gov.uk/government/news/vodafone-three-deal-could-leave-consumers-and-businesses-worse-off

“What does this mean? As a separate company or spinoff? Separate for reporting purposes? Will Vod holders get shares in this split out?

Please clarify.”

As below:

https://www.rcrwireless.com/20240116/internet-of-things-4/vodafone-to-spin-off-iot-unit-in-2024-with-major-microsoft-cloud-tie-up/amp