The div23 Nov 2022 08:38
With the benefit of hindsight and considering the overall market moves, I believe BOD should have suspended the div when COVID broke out.
My reasoning is simply that shares were getting hammered anyway and many other companies announced and overhauled div payments, inclusive of the oil companies. So did BT.
What would have been the benefit? It would have signalled, even though the total div per year is a meagre 2.5bln, that Read is astern steward when it comes to risk management. And, hey, the small div adds up and come next spring, they could have brought down the debt by 7.5bln, which would have put a nozzle on the bears flagging the debt levels, which in my opinion is nonsense as all other major telcos have similar levels of debt - debt/EBIDTA.
I firmly believe UK FTSE100 shareholders are structurally very weak compared to French, German and the Dutch. That has a massive impact on the performance of share performance but the GDP of the country in general. Defending your chips and fighting for survival and an edge.
Right now we have a skewed market, where Orange and Deutsche Telekom are partly state owned and protected and yet outperforming the likes of vod on the charts. What happened to the theory of states should not be running companies. FYI I am not a proponent of the state having a finger in firms.
So I find it rather amusing when I hear pundits highlight Vod as a mismanaged business, although it's the only player on a global scale, which is actually structurally solid to scale and reap the benefits of its many great investments, i.e. IoT and M-Pesa.
My own conclusion is that behind the scene there are PEs and super wealthy private investors who want in to snap it up. It's all show and tell until you wake up one morning to the news that Vod has been snapped up.
The replacement cost of setting up a new Vod is massively costlier than its Enterprise value. And even if one would be lunatic enough to emabrk on such a crusade, that doesn't mean they will get the revenues that Vod is generating. Therefore, to generate the similar levels of revenue that vod is generating, one needs to spend at least twice the enterprise value--> 150bln.
What we are facing is not explicitly limited to vod, it's dare I say some sort of a "targeted attack" on FTSE shares. And Brexit has a lot to do with it. The sooner a new government with some ball$ announces a new EU referendum, not much will be happening.
BTW if you had the currency effect of the thrashed £ to the equation, then vod is even a bigger of a bargain.
All the best
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