Member Info for mole_man99

I am Tarka Dhal

AltmanZ scores are well regarded measure as to an outfits balance of assets liabilities and ability to service liabilities. A score close to zero suggests a company is heading toward bankruptcy. VOD’s is -0.51.

The board actions suggest stresses not being honestly relayed to the market. Why did they buy back that bond last week then borrow more money at higher interest? Bond holders preassuring them to get them out of the bond?

Whilst they could manage their borrowings in the low rate world, this new world is pilling on the pressure of managing the debt.

Careful what you wish for. The next one can’t do much better.

The chairman reveals the boards attitude in congratulating Nick for unlocking value of Towers. Selling a key asset essential to your businesses operation is just desperate. The chairman, the board, and investors are just asset stripping to give themselves a few more divs before there is nothing left. The board is now hunting for someone to strip assets faster.

If the new CEO comes in, cancels divs, buybacks and asset sales, streamlines staffing in uk and Germany and tells those operations to get their heads down and try harder on profitability, I will be impressed and may invest, but I doubt it.

Farewell Nick. Enjoy the gardening.

As it lurches toward all time low, it is mathematically impossible for averaging down to of worked.

Throw in the divs and some holders may of made a few percent per annum return. Is it really worth the heartburn?

The debt is an issue.

First you have to maintain it. Interest payment was 50% of EBIT, so it doesn’t take much of a margin slip for there to be little or nothing for investors.

Second, as they are pretty much at the max the market will let them borrow, and they can’t pay it down, then to raise funds to keep up with capex you have to sell off assets like towers, and shrink market share in uk doing a deal with 3.

The debt removes options and is forcing management to shrink the company. It can’t be ignored just because the bonds don’t have to be refinanced yet.

Aspers is asking if not VOD then what else.

Most companies now have been beaten up and have attractive long term prices. You should first decide what sectors you want to be exposed to for next 5 to 10 years, then find companies in that sector who have grown earnings consistently in the previous 5 years, and have low levels of debt, or preferably no debt.

These strong companies will accelerate ahead faster than the likes of VOD once sentiment in the market turns.

I am in to sustainable energy and the future of transportation, data management, growth leisure oriented stocks and property. Some pay a div, but I couldn't care less about it. In fact, I would prefer they didn't, ecept for REIT's which have to.

Fleccy is asking how is not a safe place to park money. I would suggest the weak balance sheet exposes VOD to financial risks above comfortable levels should we see a protracted period of tough economic conditions.

A negative altman Z score is quite an achievement and suggests financial difficulties ahead.

Selling off essential assets (towers) to raise cash is not a good sign.

Net debt increased 4bn in the half year. They paid out the same in divs and buybacks. VOD borrows to pay a div and buy back shares. It is basically a ponzi.

It works until the funding tap gets turned off.

How is this a safe place to park money?

It may go down it may go up, but if you look around in this market you’ll find stocks paying similar divs but with a better chance of also preserving or increasing the capital.
The issue with holding VOD since 2018 has been loss of capital, and I still can’t find the reason this trend has turned yet.

This may help. It is €45bn net debt, not 40, but they are actually juggling €75.5bn of borrowing.
The result of this is having to sell off key assets like towers that they will have to rent back, and doing the deal in uk with three that will reduce the share of uk market but offload some debt.
Throw in staff reductions and cost cutting and they seem to be looking to shrink to survive.

But hey, as long as current investors and directors get that dividend it’s ok right?

The bond site is out of date. It’s still listing the $1bn they should of paid back in September, assuming they did manage to refinance it.
Bonds increased from 48bn to 50bn in the half year, despite converting 2.5bn to stock so in reality increased by more.
There are also a myriad of derivatives linked to the bonds currently giving an additional liability around 3bn.

All said and done, interest is 50% of EBIT. Too much debt for my liking followed by irresponsible actions like extending the buyback.

Avoid.

The outsize gain on the NYSE is due to exchange rate. Dollar weakening so sterling rising 2.73% today. Dollar ADR holders get the additional gain.

Strong rise is down to CPI coming in lower than expected in USA. Those yanks again. Everything up, for today that is.

The amount of JV VOD will hold is variable. Intitally it is the 81% they already own. I think the initial KKR funds going in are to buy out the listed shares of Vantage. They are then looking for KKR to raise more debt to take it down to 50%.

Never said it won’t see 140 again Rob. In the next stable bull market it will melt up with everything else, just lots of things will melt up much more I believe. 2030 is the target to see what did best for total returns. Companies with lots of debt or no debt. Does leverage pay or drag? The debate rages on.

Have never said VOD pays 7.25% as a blended average across all it's debt. At the time I was commenting that big money can find corporate bonds paying 7% now, so why risk your capital for a 7% div when stockholders are subordinate to bond holders.
VOD meanwhile won't be able to roll their expiring bonds paying 2% into bonds that pay much less than 7%, so moving forwards their interest payments will increase.

Apologies for such senseless drivel, like the drivel you pointed out over a year ago when I said rising rates would not be good for stock prices, and here we are...

VOD is low as interest rates are rising. As a long term investor you need to understand the relationship between interest rates and stock valuations.

Beyond that VOD has it’s own issues focused on it’s balance sheet and the possibility of falling margins. Costs are up, but are sales prices up by same amount? Given that they are giving freebies to attract customers, probably not.

Margins have become the main focus of investors.

And they are doing it all again, but trying the debt by stealth tactic this time, like setting up a JV to raise 5bn debt.

Ask yourself, why not pay for the German fibre install from just 6 months of supposed FCF and have 100% ownership of it?

More smoke and mirrors than a fairground here as management and stockholders try to release as much as they can to themselves before the tap is turned off. Just don’t be the one left holding the bag when the music stops.

>>It's nonsensical gibberish lol. What has the interest on a corporate bond got to do with the share price?

Everything. More money parked in bonds and treasuries, less money for stocks. Simple demand and supply dynamic.

The companies that can still do well are the ones that will show reliable growth. Cap gains plus a dividend will be essential to offset the risks of any stock over a high yielding bond. We are coming out of an era of low return bonds and stock prices are adjusting accordingly.

>>Dividend of £0.744 @ 4% interest rate should give a share price of £1.86p imho

That misunderstands hhow big money views a dividend. VOD is all about the div, and if you can get 4% from the BoE or even 5.5% on a US treasury, then you will want 10% div yield to compensate with the risks of holding stock. so 74p next year, unless they can raise the div.

If VOD themselves are issuing bonds at 7% then why buy the shares. That will probably be the coupon on the 5bn the Germany JV wants to raise.