Member Info for meshtrader

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 £45billion*2.5 (I take the lower end to be nice) => £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 don’t 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.

For someone who appears to be close to his retiring age, you are certainly not demonstrating the kind of life wisdom that should accompany such passing of time. What a shame! For the record, name calling does not fit on these boards.

Allow me to comment on your premises and statements in your argument;
1. "give us a break?" - are you the chairman of this commentary board? Are you the elected nominee to opine on behalf of others?
2. "this is the stock market, You sound like a cowboy, Stop as this bull ****? " - (i)Thanks for reminding me and others that we are talking about the "stock market". (ii) You seem to know a lot about me. I suppose you are equipped with higher powers than us mere mortals. (iii) If you believe behind the counter wheeler dealers are not taking you to the cleaners on a daily basis in this "stock market", then you have certainly, and sadly, not learned much about the markets.
3. "We are all cowboys, trying to make money, so don't pretend otherwise?" - A false statement. Interesting how you label people who make an effort to legally extract profit from an investment as cowboys.
4. "I agree about vodafone & I am a big ,supportive / share holder, so please come up with some constructive comments?" - Sadly, you don't seem to comprehend the mechanics propelling the markets and the role its agents play in it. Nothing for us to discuss. It's like asking me to teach you multiple variable differential equations when you just learned 1+1=2
5. "So, vod sells for 100 billion? to who? Complete nonsense? If any of you wise guys have a better plan than Nick Read, then let us know please, because if not you are just a load of know nothing idiots." - (i) In my comment, I was referring to its parts being worth in excess of 100billion. (ii) The market is made of different opinions. You may find it ridiculous that I find its parts to be worth a lot more than the current market estimations. As for mr Read, his days are numbered and activists investors such as Gardell will take of that. CFO's rarely are optimum candidates to lead telecom, tech, science, engineering companies. They may maintain the status quo, but they are rarely visionaries, simply because of their fundamental lack of appreciation of the underlying components thrusting their respective businesses. Best and most recent example is Tim Cook. Nothing revolutionary has come out of apple since Steve's passing. Mr Read is a number cruncher who loves to play the diplomat/politician game.

My final remarks, UK suffers from weak shareholders across the board, hence the relative weakness in visions and ownership.

And Daniel, sort yourself out and get a life! My advise, start by educating yourself first.

A bunch of cowboys who are setting certain funds and their own dark pool up for percentage gains. "Hey Mike, I am down on the quarter, fix me a bunch of quick traders mate. I will cover you next time and send you trade orders your by more than 100% of current volume we do business with you at BankofPhuckingAmerica"

The sum of parts of this business is in excess of 100billion if they were to sell the whole lot. Just keep adding at these ridiculous price point. Take it as a free advise from me.

This is a solid business and unique on a global scale.

He is talking out of his behind. Let him get on with his nonsense garbage "analysis".

Use any dips to buy. If anything, the unsolicited italian bid proved how much vod is under valued.
If the story about vod being the most shorted stock in europe is true, then expect a massive short squeeze as it will come and it will bloody painful.

re-visiting this thread that I opened on the 3rd Nov. Look at the chart when this post was made;-) Hope you went long.

"Looking at the long term chart. It appears the dive commencing in June 2015, reversed this time last year. We appear to have completed the 2nd wave down (time will tell!) and the 3rd wave (multi/month if not year) up kicking in soon, taking us way beyond the 140 levels.

Again, if the 104 level holds and we bottom out, the technicals are supporting the above as there are tons of bullish divergences in play.

We also have the underpinnings of the fundamentals to support such aggressive reversal. All in all this is a proper accumulation opp IMO.

Good luck!"