Member Info for Longish

H-hi
This is the BoE example how QE works:
'Suppose we buy £1 million of government bonds from a pension fund. In place of the bonds, the pension fund now has £1 million in money. Rather than hold on to this money, it might invest it in financial assets, such as shares, that give it a higher return. And when demand for financial assets is high, with more people wanting to buy them, the value of these assets increases. This makes businesses and households holding shares wealthier – making them more likely to spend more, boosting economic activity'

Pension funds must be worried. Would they buy more now or wait until, say, the Liberty deal is cleared or Westminster has closed out on Brexit end of March? The ECB is reinvesting QE securities as they mature through to at least Q4 this year.

https://www.bankofengland.co.uk/monetary-policy/quantitative-easing

H-hi
'a Vodafone Fintech (mobile bank / payment processing) would be great for hype'

Vod have successfully launched M-Pesa for Safaricom and Vodacom in several African countries. Maybe this is a quick win in Europe etc
https://www.vodafone.com/content/index/what/m-pesa.html#

Yep.

On the upside, offsets incremental debt on the balance sheet and interest charges in future P&L performance

Earl
I dont think it is price related. For example, Macquairie say it is Vod structure causing the horizon value to drop. So restructuring before price. NR (CEO) is driving this in published programmes including single platform 5G and multiple platform 3/4G depending on regions

Andy,
30% of my holdings. Unfortunately its difficult to get out of LoL

Andy
Agree operating cost would increase if nothing else changed but 5G is a single platform.
So Vod is removing multiple platform costs etc to offset.
Already started the network process by moving to software defined networks and retiring physical switches, buildings etc....complex and hard to measure step benefits except at EBITDA, FCF, hence the focus in their reporting

I guess another outcome maybe debt converts to equity (dilution) and yield % moves down. Absolute div cash paid stays flat. Lots if moving parts which NR and MDV seem to be on top of. Liberty clearance and execution will make a big difference

No dont agree. Leave the div flat as NR announced. In this market SP will spiral down as the benefit would be cannibalised.
ECB continuing with loose monetary policy where Vod us strongest so I cant see the urgency. Let the economy decide if it wants Vod services

Andy,

I guess it could go the same way as C&W as it is a similar global trading model with regulated/ not regulated regions.

There were a couple of boom bust cycles before the end of C&W.

I suppose this may happen like Inmarsat. But really the SP needs to go up with 5G potential

Thanks. So confirming will meet FY guidance.

Its an easy economic decision not to use a suppliers kit in the 5G build. But if there is no choice but use, say, erricsson, then its likely to cost more as there is no price competition. I am sure the politicians will find something to do post Brexit on this one

Was easy to sell handsets (revenue) with no margin and take the revenue up front. Now it is recognised over the length of the customer contract..

Service revenue from data usage is one of the few growth revenue and margin streams in the global telco sector (smart phones).

If global gdp continues to grow at 3% then Vod servoce revenue will grow too (coincidently Vod ebitda guidance)

Hi Andy
This is what Vod previously reported regarding Liberty deals and debt

The increased exposure to resilient converged revenues and an enhanced growth outlook supports an increase in the Group's long-term targeted net debt/EBITDA ratio to 2.5-3.0x compared with 2.0-2.5x currently. Pro forma for the Transaction, and after excluding the EBITDA benefit from UK handset financing and settlements, Vodafone's FY2018 net debt/EBITDA (on a consolidated reported basis) is expected to be at the upper end of this range.

The mandatory convertible bonds (MCBs) are expected to mature around three years after completion. Assuming the Group has sufficient headroom within its targeted 2.5-3.0x leverage range, Vodafone may elect to purchase the shares issued under the terms of the MCBs, thereby avoiding equity dilution. Vodafone will also hedge its exposure to share price movements during the term of the bonds via an options strategy. This strategy involves the purchase of call options funded by the sale of put options, which ensures that at maturity, the economic cost to repurchase the MCBs will be similar to the face value of the bonds at issuance; additionally, when the MCBs convert to equity, they will effectively do so at the prevailing share price at the time of conversion.

Dividend policy unchanged
Vodafone reconfirms its intention to grow the dividend per share annually, which is further supported by the expected accretion to FCF per share from the Transaction.

http://www.lse.co.uk/share-regulatory-news.asp?shareprice=VOD&ArticleCode=wisy6ck1

LoL RBC double downgrade 125 on Tuesday last week must have been 2 fat fingers. One fat finger today 144

Hi Jandialibi

Thanks. Its academic now but this broker round up today says RBC 144. The BB has been talking 125 all week?

https://uk.webfg.com/news/broker-recommendations/friday-broker-round-up--3708811.html

Didn't RBC downgrade to 125?

Today 'RBC Capital Markets reiterates underperform with a target price of 144p'

I have lost the plot on broker forecasts. Anyone know?

Cash div paid next week. Luvly Jubbly

Vod can borrow qe reinvestment monies at near or zero rates. ECB doesnt reinvest when the securities mature..

Good result and no surprises :-)