PYX Resources: Achieving volume and diversification milestones. Watch the video here.
This critical and milestone news was neatly brushed aside amid the market depression in the last couple of sessions. Something is really broken with these markets and the UK government mess isn't making things easier. And the irony of it all? An EU member making the first investment and not the deluded government. UK stocks never recovered from the suicidal brexit.
https://world-nuclear-news.org/Articles/Collaboration-for-Rolls-Royce-SMR-deployment-in-th
Gary59
"Thatās all well & good mate until a company cuts their dividend.
Iām not suggesting VOD will do so but they have masses of debt, if earnings donāt come in because of the economic tidal wave thatās about to hit then a cut is possible. None of us know so the best hedge if you want to stay invested in stocks is to diversify."
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Apologies for the cynicism, but to me the above sounds like; "if I don't eat, I will die".
Have you even bothered to look at the debt schedule for vod? If so, tell me what worries you? Right now you come across as somebody who has never used mortgages or loans.
is the ECB. The yanks are betting against both the UK and the Euro region. Their particular concern, this time, is Italy. Is vod being sold down because of its iItalian unit? Hardly! And we all know what ECB will be doing when the fat cat bureaucrats return from their exclusive holidays. They will, with 99% likelihood, backstop and guarantee any Italian default risk. Why? Because they have to, less they prefer EURO and, EU for that matter to get annihilated.
Some macro funds are trying to play Soros game by shorting italian debt. It wont end really well for them. I truly hope they have already covered their shorts and pocketed handsome returns, because the ECB will do whatever it can as Mario famously said back in 2012. I did lose a massive bundle on my shorts when he shocked the markets then. For those interested, here is the current spread to the german bund; http://www.worldgovernmentbonds.com/spread/italy-10-years-vs-germany-10-years/
This market selloff comes during the holiday season based on bogus narratives and low volumes. Funds have had to deleverage across asset classes indiscriminately to beef up their cash positions and reduce over the top leveraged risk exposure. Inflation is expected to be rampant (ca 10%) for a foreseeable future. The money managers who are salivating over this drop know fully well that very high inflation such as the one experienced right now will erode debt. They KNOW cash is trash and are doing their best to trash talk stocks through any media outlet.
I will end by the following teaser, is this all about valuations, debt, inflation or the future status and viability of the world reserve currency;-) End games are certainly intriguing.
Mehmehmeh
No, NL makes up a strategic spoke of Vod competitve advantage. A few of Europe's biggest tech companies have HQs in Nl and millions of people travel to and from NL and its right next to their biggest market, Germany.
Mrcautious
Just to put things into perspective. At the time when Vod acquired Mannesmann for a whopping 190billion, the following were the libor rates a the time. They managed to service that debt then without issues. It's all about the cash flow and vod got tons of it coming their and rising.
https://www.global-rates.com/en/interest-rates/libor/european-euro/2000.aspx
From the outside, and on paper it looks as if Vodafone has made a similar deal to that achieved by Deutsche Telekom and Tele2 last year through the sale of Tmobile Netherlands.
Without like for like details, it's rather difficult to compare precisely, but based on net revenues, it looks as if Vodafone arrived at a slightly better negotiated deal.
Based on publicly available info:
Vodafone Hungary: Revenue$681 and negotiated sale price of $1.8billion ->2.64 times revenue
Tmobile Netherlands: Revenue$2billion and negotiated sale price of $5.1billion->2.55
The interesting part of this deal is that Vodafone Business Services which makes as much revenue (based on Business Services revenue line for Other regions in the annual report) is not part of this sale, allowing the group to "hedge" its position in the region.
Given that this is not a straight sale, I would not be surprised if there are additional beneficial kickbacks for Vodafone in terms of brand licensing and the rights to refusal to re-purchase the asset/entity at a later date.
Finally, Hungary has a population of almost half of that of the Netherlands. Therefore, and in theory, a lower price/revenue should be attainable during such negotiations as there is less addressable market to grow into. Also, the population is less wealthy, making it more difficult for such entities to improve margins through sale of higher end packages etc. Again, the genius in this deal is that they have kept the right to the brand and the Business Services right.
Based on the above sale price multiples (and rather imprecise valuation model) and Vod's 2022 annual report, the market should value the company at Ā£45billion*2.5 (I take the lower end to be nice) => Ā£90billion (inclusive of debt). This implies a stock price of ca 80p higher from the current levels.
At these levels, it's a screaming buy.
Here are some links for fact checks:
https://www.rcrwireless.com/20220822/network-infrastructure/vodafone-to-sell-hungary-operations-to-4ig-state-for-1-8-billion
https://telecoms.com/511240/t-mobile-netherlands-sells-for-over-e5-billion/
The stock is being moved around on low volumes. A better indication of the trend will emerge when traders are back in Sep.
The SP is currently trading at ca 5x its FCF. That's a bargain. As a comparison to something like ULVR which is trading at ca 13 times its FCF and Apple at 26 times its FCF.
Fleccy
Valid points, but you forgot the elephant in the room - inflation. Vod hasn't even begun to properly adjust their pricing plans to reflect the current market conditions. At least not on the consumer side. On the b2b side of the business they will move more aggressively whenever contracts are due for renewal. Same is also true for other telco players.
Prices will have to be adjusted by anywhere from 15-30% in the coming 36 month period, unless we get into a kind of hyper inflationary situation in which case the debt will be gone in no time. That would have a material impact on both top as well as the bottom line, but more importantly on the net gearing. This is a huge lever that should be obvious by now.
The question still remains, what is the replacement cost of Vodafone? Its the only mobile operator with a global brand recognition. Right now the market doesn't give a hoot about their brand value. A big mistake.
Lastly, M-pesa (50m+ users) is a gem, which is flying under the radar. It's the biggest mobile financial transfer infrastructure in the developing world. Not to mention the explosion of IoT that is coming our way in the next few years. Think autonomous vehicles, deliveries, connected devices etc. Massive untapped market, where Vod is investing heavily in.
I am bullish and vod is one of my conviction trades.
@Porsche
Then you should sell and move on or short. Investing/trading is rather easy as long as you are consistent with your own thesis until invalidated.
Just to challenge you, how much would it cost you set up a new Vodafone?
@Stille
Not sure what you are on about. I have had zero issues using vod app support service. Instant responses and they attend to my queries straight way.
This is what their focus has been on the standardisation of customer experience across the entire organisation. They are now leveraging A.I. to a greater extend as they are well on their digital transformation journey. This is just the beginning given the unravelling of the converging tech.
"Gotta talk about something while VOD holders wait to see if debt has to be refinanced at much higher rates. First up is a billion dollars in Sept at a coupon of 2.5%. Probably have to double that coupon.
About 11 billion euro currently on low coupons has to be refinanced by 2025. They donāt seem able to pay them off so will have to roll them into higher coupon debt."
Just keep posting nonsense. A few months ago I posted that Vod is coming out of a multi year down trend. We are standing at the cusp of a massive reversal. We will be north of 200 within 24 months, unless hell breaks loose in the broader markets.
Vods position as a global telco provider is undisputed and substantially undervalued. And to those who don't see it or won't, repricing of contracts across the board in the next 24 months will bump up the revenues significantly (8-15%). The likes of ericsson locked in low prices in return of long term commitments/investments from vods and its peers and are now suffering lower margins as a result of inflation upticks. So for Vod, limited supplier side inflation and zero-ish on the customer side as prices will be bumped up before long.
@Fleecy
A tough question, but having 10% less shares floating around helps. Add to that the multi-year bashing of telco stocks for no reason other than unicorns were perceived to offer better "value". As we can see, however, the chickens are coming to roost.
Nobody in the mainstream media has the guts to say it as it is, that a significant number of Nasdaq listed tickers are and have been crashing. What does crashing means to me? securities that drop more than 50% in a short time frame.
Boiler room brokers
comsman, I tend to disagree simply because of VODs unique global coverage and diverse business model relative to other telcos.
Also, with increasing prices, debt will reduce accordingly. Should really have they dispose of Italy and Spain at any time and get 20billion+ for it. You need to look at the business as whole and not staring blindly at the liabilities. There is an asset side to the balance sheet;-)
With your viewpoint 90%+ of all mortgage holders are doomed as they are employees and they can lose their jobs at anytime. Yet, Vod is a lot safer than that analogy given their utility status.
Baffling how people disregard hyper inflationary's impact on debt. I was expecting that least the average user here understood that in an inflationary environment, those who borrow to acquire assets at a fixed rate are the winners - cash is trash.
Based on the current market environment, you can bet your house that VODs revenues will be increasing in line and above the inflation rate of ca 8% whenever they reprice contacts etc. So rather naive to imply that debt levels are hurting the business, which it clearly isn't. Its the business model of the telcos. Heavy capex is part of the game.
"as an after thought how can someone buy nearly 1o% of a company and the share price as been on the decline for the last mouth or so? do they buy in drips and drabs of a whole lot in one go?"
Typically bought in drips and drabs, but also an over the counter deal with one or several larger holders.
I believe they started buying at around the previous financial update in February.
With this UAE investments, there will be less shares to go around. To the tune of up to 9.8%
I was moaning about the generally weak ownership structure on FTSE, and UAEs have shown them how this is done. Perhaps the best thing that could have happened to vod.
I trust my recent posts cement and bring home the message i have been conveying - charlatan "brokers/analysts" putting out a claim on behalf of their client(s) to push down prices so they can gobble them up. At least in the case of vod, this seems to have been a rather obvious tactic in the last few weeks.
The blue horse shoe handed some gifts and reciprocated under the table deals.
"you will see the long term debt building over years to 45 billion plus the short term debt"
Rather interested in how you arrive at this figure given that the net debt inclusive of leases stands at 5.1billion.