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Stocks and dividend payouts
Stock
Expected dividend yield (%). Return year to date (%)
British American Tobacco 8.8 -16.3
Imperial Brands 7.7 -8
BT Group 6.1 12.9
Lloyds Banking Group 5.6 3.3
HSBC Holdings 5.3 30
WPP 4.7 5.3
Beazley 4.7 -15.2
Schroders 4.6 8.9
Johnson Matthey 4.2 -11
GlaxoSmithKline 4 -1.7
Source: Morningstar Direct, accurate as of 27/07/23
Nige, Drahi built a sizeable stake without too many knowing about it, also if the dynamics of Drahi’s portfolio change to one of the listed milestones he can again be in the frame to bid or not bid. And of course if DT speak to Drahi about his share holding, and take it off his hands for a nice stash of euros, the bid window is open again. I think DT want it it’s just a case of how cheap can they get it for.
130p cop today?
Absolutely Nige, it would make sense to hoover up as many shares as possible, in stealth and under the radar. Imagine if UBS were commissioned (already approached) to facilitate the takeover, it would explain a lot of the managed negative press.
Cont…..
My view is that the shareprice has to be circa 390p (£50b less Bal Sheet injection of £11b). And that’s conservative, it’s a steal at this price, it’ll be a mega steal at 250p-350p and daylight robbery at anything less.
DYOR (underlined)
Open for discussion and food for thought.
What are the main factors to why the shareprice is so low? Debt and liabilities?
OK simple maths here. If a person or business bought BT tomorrow for £2 a share (not saying this is the bid price, just a nominal amount) so £24b ish initial outlay. Let’s discount the ownership of DT and Altice just for the moment, bare with me.
If the owner then pumps money into the balance sheet to reduce the debt pile to a healthy gearing ratio, let’s say £5b.
And also to quite considerably reduce the Pension liability to a manageable level, let’s say they pay into BT scheme to the tune of £6b, “one-off, that’s your lot”, not sure the £3.5b current number holds any water.
The acquisition has cost the new owner £35b.
So if what’s bringing down the share price is its debt and liabilities, this has been de risked.
So would the company be worth £35b if the new owner was to IPO it again. I think not.
EE, I’m guessing would be more than the £12b, so let’s say £15b.
Openreach (plus holding company containing Network, Assets) let’s say £25b (more than a labour force price which Fleccy buys into) but less than £40b some have said which I guess would include all the bells and whistles.
The BT Business (Global and Enterprise) is worth £5b-£10b and Consumer (without EE but including Plusnet) is worth another £5b-£10b so let’s say £5b each conservatively, TalkTalk had a valuation of £1.1b a couple of years ago with a turnover of less than a billion. Both BTB and Consumer have a turnover of approx £9b each (from the accounts) so I’m being conservative, and of course all the above would have low gearing.
The above totals a conservative £50b without all the ongoing concerns, goodwill, intangible assets and brand value, and other odds and sods, property freehold and copper etc.
Now! The not so simple numbers.
Altice/Drahi accumulated much of his BT portfolio at the lower end of shareprice range over the past 3 years, let’s face it the shareprice performance hasn’t been great. So let’s say an average of 150p (range 100p to 200p, both these polars weren’t realised for much of the time). So 24.5% x 150p = £3.7b.
DT paid £4-ish a share for their 12.06% stake = £4.8b
So prior to making a bid, if DT were to offer Drahi 250p a share, a 60% uplift, totalling £6.1b and a £2.4b profit, DT would own 37% for £10.9b.
If they were to offer 250p for the other 63% that would equal £15.8b
DT effectively buys BT for £26.7b. With a conservative value of £50b if it spent £11b to create less gearing.
Of course this is only 250p, the company with less gearing and liabilities is worth a very conservative £50b.
My view is that the shareprice has to be circa 390p (£50b less Bal Sheet injection of £11b). And that’s conservative, it’s a steal at this price, it’ll be a mega steal at 250p-350p and daylight robbery at anythi
Might be no bad thing. If Drahi is accumulating shares on behalf of another party, the other party may get slightly edgy, and may want to exercise their option to close the transaction sooner rather than later.
Doh!
Corruption scandal puts billionaire BT shareholder under pressure
Fallout from investigation likely to prompt scrutiny of telecom company’s foreign owners.
“If you want to be successful, work hard, have fun and above all, listen and do not talk too much,” billionaire Patrick Drahi said in a rare interview in 2017.
The Franco-Israeli businessman appears to have taken his own advice. Despite building a fortune from his media and telecoms empire Altice, the tycoon has remained largely under the radar.
Virtually unknown in Britain until recently, Drahi has steadily been building his presence in the UK.
In 2019, he took control of iconic auction house Sotheby’s in a $3.7bn deal. And for the last two years he has tightened his hold over BT as his company has become the telecoms giant’s biggest investor.
Now, though, the reclusive billionaire is under the spotlight.
A major investigation into alleged corruption, tax fraud, forgery and money laundering by individuals and senior executives within his empire has provoked questions about governance at Drahi’s businesses.
Drahi and his company Altice have not been implicated but the scandal has prompted an internal investigation and sparked fears of reputational risk among staff.
At the heart of the scandal is Armando Pereira, the co-founder and former chief operating officer of Altice who is often said to be Drahi’s right-hand man.
Pereira was one of several figures arrested in Portugal earlier this month in a major probe dubbed “Operation Picoas”, during which officials raided dozens of offices, homes and law firms across the country.
The department of investigation and criminal action (DCIAP) said it had made three arrests and seized documents and possessions – including luxury cars – with a value of around €20m.
Prosecutors accuse Pereira of taking part in fraudulent property transactions and concealing profits from asset sales while working at Altice Portugal. One of the deals under investigation is the sale of four buildings in Lisbon for €15m.
However, officials believe this could be only the tip of the iceberg and the fraudulent schemes could extend to other areas including football TV rights.
Illicit gains could exceed €250m, at the expense of both Altice and the state, according to media reports.
Pereira, who is 71 and described by local press as Portugal’s richest man, has been held in custody and began testifying this week.
A lawyer for Pereira said his client had been the “target of a widespread attack in Portugal in recent days”.
“The communication surrounding this operation was done in such a way that it led to his being immediately found guilty in public opinion,” the lawyer said, adding that his team will demonstrate “the reality is not so simple”.
Pereira last week denied all allegations against him during an appearance in court. Cont…
Any company specific information effecting share price must be communicated to the city before hand. PJ had a legal requirement to do this as soon as the channels were open or his mind was made up, to tell the employees on a forum chat that he was intending to step down even if he had discussed it with the wife, and pet goldfish that morning is irrelevant. His duty was the city first and anybody else 2nd.
PRK, “Definitely. All the money that could be invested in shares currently tied up in bonds. If the interest rate continues to fall then maybe that will boost share prices”
Inflation numbers have fallen, not interest rates.
BP for PM. Yep wishing the stock you own for thousands of pounds would plummet so you can jump in and buy an extra 73 shares when divs are paid out, is suicide economics.
I would have thought or expected the good folk at BT would have been kicking in the door to OFCOM on numerous occasions challenging them with legal counsel, so that fair rate of return can be achieved, instead of rolling over like a puppy to get its tummy rubbed. Been happening this past 30 years give or take.
RG, Fair point, but who’s to say that these conversations haven’t been going on in the back ground this past 18 months. The board with Tim on it, HMG and Drahi. As an aside I just wonder if Tim’s quote was misquoted referring to the King Maker, I think Drahi is the Earl of Warwick (the protagonist) and Tim is Ed the 4th. This is a DT battle and BT is the crown.
Nige, I think the shareprice is worth circa 390p but any bid will be in region of 250p.
Nige, there small tremors appearing, the fact that the media are even including sentences or paragraphs with the word bid is positive or encouraging and not repeating the usual negatives we’ve been eating for breakfast this past 5 years. If Del Boy had BT shares he would say to Rodney (not you Rod), this time next year we will be million-penny-aires.
Hopefully the lows of 120p are history. Whether a bid is successful or not. We are now back to the low shareprice of the early days of lockdown, when the FTSE plummeted from 7500 to 5000 in just days. The FTSE has now recovered to 7300 but BT hasn’t, until now I hope.
I’d ask Polo Tang to headhunt a replacement for Jansen, that way he might cast a little positivity BT’s way.
It’s ironic that HSBC is moving its HQ from Canary Wharf to BT’s old HQ at St Paul’s. 2 years prior to its lease in Docklands being up. Could have kept all the top notch connectivity there for the new tenants.
Agree Rod, we are currently in the season where no deals are done, the 55k of headcount savings was a massive for sale sign going up to say “four bedrooms, quiet cul-de-sac, good schools, excellent transport links into London………….” September/October will be very interesting. I’m buying on that basis now.