Member Info for Velo

Good point L/tree.
I too, would expect the SP to rise on the 13th should Bojo still be No:10.

But -

Only thing is, Johnson (if he wins) will be galvanised as never before after the Labour broadband fright, to "get fibre broadband done" to use his vernacular.

So will the market continue to bake in more govt interference?

What will market sentiment think of BT and future govt interference, despite Labour being out of the loop?

Thanks bkk & Figs - apperciated.

Tarot cards? :) :) Do they do refunds at the Tarot card shop?

To answer: Where do I see the SP in 12/24mths?

Honest answer is: I don't know. Sentiment will decide that because the fundamentals are crying out for an upward rerating as they always have. But how many years now have BT been seen, to be undervalued?

As the investment books say, with deep value stocks, you can wait way many more years than you thought possible before the market acknowledges that value too. It's why analysts are the world's worst at predicting the future SP. They can calculate the fundamentals which then become the market's expectations, but putting an SP on that, means 99.9% are usually wide of the mark. Mainly because sentiment plays such a strong part, and you just can not predict sentiment reliably, on fundamentals alone.

Sentiment in BT's case means govt interference via Ofcom and now potentiality nationalisation which would reduce BT's remaining business after the asset-grab, to a fraction of it's former value. So bearish sentiment has shown why it's been so negative towards BT.

On fundamentals (as has been the case for several years now, BT is worth well more than its current SP (that at the current moment IMO that is 275p). Have had it projected as much higher in previous years, but that's on plain averages.
Vodafone is rated more than twice higher than BT is, so if ever the market rated BT on the same scale as VOD then the future value would be circa double x 188p = so 376p and higher some more.

But for years now, VOD and BT have followed their own path on valuations and neither has moved significantly from the rating applied to them by the market. One is valued higher than the market average, the other below mkt average. That remains the case to this day.

(PS. If the market applied the plain industry average equally, to both stocks, VOD would be 90p today and BT 275p)

I do attempt to monitor sentiment mainly via moving average trend lines, and additionally TA indicators etc., etc.,

Long term the trend lines have always have been - and continue to - point downwards for BT. And mostly they've been proven correct. I get quite animated when they look like they're approaching a trend change, but it's happened only the once (and for 5 continuous months only) in the past near-4 years before reverting back to looking south. I'm looking to see if they're about to level out, akin to a bumpy airplane landing, and thus signal the floor area, if nothing else.
- Time as always, will tell.

( Concludes > > > )

Summary:
Q3 net profit analysts forecast for £486m
I'm seeing Q3 net profits for £553m minimum.

Revenue:
Q3 analyst forecasting £5.777b
TTM not seeing much higher than that. A bit more, but not much.
--------------
So it all hangs on the net profit at Q3
(That's after-tax Net Profit; pre-tax profits always dazzle - as much higher before paying taxes).

(Part 1 of 2)

Once again, the analysts Consensus forecasts for Q3 (due to complete at end of Dec) follow the same path as their Q1 & Q2 forecasts. Which is, not only bearish in outlook, but actually less than that achieved on the past 2 quarters when compared to BT's actual results.

Q1 Net profit and revenue actually beat the analysts forecast, but even so were still down on last years actuals, so the SP did not respond positively.

By Q2 it was a repeat of them underestimating BT's actual results. Q1 net profit came in with £505m - and Q2 beat the forecasters again coming in with £563m, thus giving an H1 actual of £1.068b for net profit - well above the analysts forecasts which was under £1b net profit in the high £900m's

So £1.068b net profit is in the bag and already banked. Done and dusted.

And if the Q1+Q2 were repeated for Q3+Q4 then the minimum to expect would be £2.136b net profit for the full year. As last year was £2.159b that would still represent a decrease on last year - the first in many years and hence the market's renitence towards the SP.

However using the TTM (Trailing 12 month interim updates) I'm seeing the full year forecast for net profit as £2.175b ! - an actual increase over last year!
To make that happen Q3 actual, would need to deliver circa (£553m net profit).
I'm plumping for achieving a minimum of £553m in Q3. (Q2 delivered greater at £563m remember?)

Consensus analysts forecasts out this evening are only offering £486m (Analysts mean+median/2)
Pfftt! Both Q1 and Q2 actuals beat that by a country mile. Why would Q3 crash so abysmally?

Whatever, the market is not going to like that negative net profit forecast by the analysts; so not expecting anything from the SP, especially with Dec 12th looming.

Revenue Q3 analysts forecast is for £5.777b but at least that still gets the full year revenue just about clear and over the £23b cut-off acceptability point.

TTM has it higher than that, but won't cross swords with the analysts on revenue as they have proved to be closer to the mark with revenue to date (but they've been hopeless or worse on net profit). Besides I too have revenue declining into the future.

But what's really interesting is taking a peek at the analysts very bearish forecasts for net profit and revenue for the 3 years after this financial year completes.
The bad news is, they have revenue eventually falling below £23b to £22.9b over the next 3 years.

But the good news is, they have net profit rising to £2.346b by financial year ending 2022.

I have it higher than that, but for 2022 let's go with theirs for now, as it represents the second highest net profit ever achieved over the past 6 years already so far! And that's from the permanently under estimating analysts who have under estimated ever quarter so far!
------------------
Summary:
Q3 net profit analysts forecast for £486m
I'm seeing Q3 net profits for £553m minimum.

(Continues > > >)

BT have finally posted the Q3 forecasts on their site - after 5pm by the look of things. With TL saying he saw some of them yesterday I suspected BT was in posession of them all and were in the process of finalising publication of them.

Well here they are, tonight! Overdue too.

A case of same old, same old. Once again they've gone for a low Q3 net profit interchangeable with their incorrect under estimates in the previous 2 quarters. Revenue to continue its descent (expected). Came out after market closed but shows by the SP poor close, how some news leaks out beforehand with them forecasting poor net profit and poor revenue for Q3.

Will post the TTM estimates I am seeing which once again are at odds with all the bearish analysts. I've disagreed with the analysts forecasts on net profit profusely all year from the off and as luck would have it, BT's actuals saved my ass and came out as an increase on each quarter's publication. Going for the triple now :)

Q3 actuals complete at the end of December and most probably those results will be published by end of Jan next year.

Off to digest them further and translate what I'm seeing, into written form, so will post later this evening what the Q3 analysts forecasts state and post what I am seeing on my screen which for net profit is far, far, greater than all the analysts forecasts.

Thanks TL,

Hee LOL! - HL is one of my own portfolio broker's. Only ever look at it when buying/selling or valuations.

Shares magazine I get free each week as a curtesy freebie bonus from another of my other ISA brokers - At least a full year and a half behind in reading them LOL!
Perhaps there's something I need to click to receive the broker updates, but my inboxes are under constant assault, so better not :)

The full range of analysts updates provided by BT itself, is the finest coverage of any company anywhere in the world IMO
(Wish the LSE regulators would make it mandatory for at least the FTSE350 to copy BT and provide similar data on their sites). Wouldn't kill them to do so. It's all done for them by the House brokers. An office junior could copy paste the lot up, onto their websites.

HHi @ " Questions.........What is the total debt of BT? What is EE worth? What is BT + global services worth? What is BT TV + Sport worth? What is OR worth? "
--------------------------
Why don't you ask hard questions, instead? :)
Rhetorical questions there I assume, HHi?

Just fast/skimmed through 190 odd pages on BT's site and they only give data for these headings:

Consumer
Enterprise
Global Services
Openreach
Other.

If there is a breakdown on the bits you mention then they're elsewhere in the 190 pages.

What is known:

I have net debt easily to hand for the current year ending as £19.6b (Massive increase on last year's £11.996b)
Pension deficit I have only last year's figure of £7.23b
So by total debt maybe that's those two added to get circa £26b+ ?

Enterprise Value of the entire BT group is £37.81b it includes debt and other stuff - (Market Cap at current SP is £19.11b) Pension deficit's are never included in those (I think).
So on the open market the BOD would turn down any offers that were less than double the current SP M/Cap (£37b v £19.6b) And that's if they thought 190p+ was a fair price in the first place - they don't! So you could double it again, then they might start talking as double the current SP only pays off the debt and leaves shareholders with 190-odd per share. Will Labour most likely see 190p-odd as "fair"?
Jansen said in the media:
"On Friday morning, Mr Jansen told the BBC that the nationalisation was likely to be at a “deep discount” to the current share price,"

So if he's right, bang goes 190-odd equivalent BT would receive if that's the price on the day it all happens - If.

The rest is too hard to calculate on what's available in the public reports. Even the best experts value Openreach as between £12b to £25b - they can't agree on a closer figure. Earnings of Openreach are approx 22% of BT groups entire earnings.

Of the above, here's what Labour say they want:

Openreach
Enterprise
Consumer
and parts of BT Technology.

That would leave from the official list:
Other
Global Services
and whatever BT Technology remains, whatever that is, as it's not delineated in the reports.
Or to quote Labour themselves:
"However, Labour said that it would leave other parts of the business in private ownership; EE, Plusnet, BT Global Services, BT TV and other non-broadband divisions."

Here's another way of looking at things - the number of employees per division.

Consumer = 19.7m
Enterprise = 13.4m
Global Services = 16.6m
Openreach = 33.2m
Other = 23.8m

TOTAL = 106.7m employees (Last year's accounts).

So I roughly calculate that as, BT losing 65%+ as a minimum of all it's employees. Just a ball park employee figure to maybe establish what kind of business BT would be left with. From 106.7m down to 30m+

In other words BT would lose 2/3rds of it's entire workforce.

TL @
". . . In my view, the BT share price is being held back by three valuations, which were introduced yesterday, these being:
Barclays Capital - Underweight, 160p (downgrade); Deutsche Bank - Sell, 165p (reiteration); and UBS - Neutral, 165p (reiteration) . . . "

---------------------

Those 3 brokers are part of the coterie of House brokers that include BT as one of 'theirs' on their books.

Yesterday (Monday) you say?

Was expecting the full 20 brokers update on Q3 by the 14th of this month latest, but left drumming my fingers waiting. So although checked this morning, raced over again after reading your post, and still no update since the 25th Oct!

As they are part of the overall House brokers that monitor BT, I can only assume BT have all the brokers forecasts to hand and are in the process of kicking them into shape for publication on their site as highly unlikely 3 key brokers would publicly release separately from the others? Or would they? Perhaps BT is waiting for the laggards to hand in their homework before publishing, to all intents and purposes, the "market's" latest views?
Whatever, something is well out of normal with them on this occasion.

Where did you see those 3 specific broker updates yesterday TL - was it on Research Tree or similar?

20 brokers? This morning noticed only 19 listed as one has done a bunk. Deutsche Bank hasn't ceased as a broker just yet, despite publicly announcing it is closing down the analyst arm of their business. So can't work out whether it's a broker from the lower end, or one from the bullish end of averages that's done a bunk.

My current view: Net profit a cause for celebration increasing year after year until near rivalling highest levels of years ago. But Revenue a continuing cause for concern, to decline year after year, well into future years. On the last analysts forecast update, they had this full year net profit to close as a serious decrease (hence the big retrace back in August, down to a smidgen below 160; no other reason).

By non-analyst TTM methods it's showing as considerably UP further than revealed at H1, by this financial year end.

Waiting to see if confirmed by analysts, or whether they've had wind of Labour's plans beforehand and have thrown their own forecasts into disarray. Would rather they stalled until after the 12th Dec in that case, as I have tremendous net profit showing on my screen, year after year, into the near future.

(Q3 concludes at the end of Dec by the way - so hurry up BT/analysts :)

Just need latest analysts forecasts to confirm as they badly underestimated net profit in Q1 and Q2, but on the other hand they got declining revenue in Q1 & Q2 spot on.

Nice post Chief.
- Chief's lament of:

". . . As someone that bought in to BT for a small brief turnaround & ended up 'holding' from 3.40 & now massively under water, it seems to have been one nightmare after another. . . "

- surely must echo with many, and an opportunity for me to post a pithy copy'n'paste from one of my investing books (circa 2011) Never wanted to refer to it as investors don't want to be continually depressed over a holding besides there's many a bear on most forums to do that job. Anyway here it. Although published in 2011 it's as if it could have been written today with BT in mind. Read it and tell me it has utterly no revelance to BT :)
-------------------------

DON'T PLAY WITH POLITICAL FOOTBALLS.
==================================

Industries and companies can become political footballs. When they do they are screwed. Business folk think they are smart and tough, but politicians are the next level of machismo. Politics will always crush business.

It is a happy business that operates away from the dead hand of government.

For sure, if an industry makes too much money, government will find a way to confiscate a lot of it.

One of the good things about new industries is that government takes a long time to get its fangs into them and therefore there is plenty of room for growth before the parasitical drain of government gets hold. The final phase of this death grip is when government tells business what to do and makes it pay for the blessing.

Now as a socialist you might be gung-ho for government; that’s OK. Places with a lot of government and huge taxes like Sweden can certainly be better places to live than Puntland with neither tax nor government. However, as an investor, you invest in companies with an overlap with government at your peril.

If a company is actually a political football, it is doomed. A company caught up in a political process is like a ragdoll in a game of tug of war between two pit bulls. It can be fun to watch so long as you aren’t the poor kid who owns the doll.

When politicians get involved in industry you need to remember; they don’t know about business they know about politics. Politicians don’t care about business, they care about politics. Politicians don’t care about profits they care about politics. You get the idea.

As such, a company that gets itself caught in the political machine can expect to be horribly mangled.

(Then a pivcture of a crashing price chart similar to BT's since 2016 - but in this instance the author shows RBS price fall).

A thought strikes me on recalling the Chairman and CEO's demeanour in those interviews., and it matches the impression given the similar print/online interviews. And that was one of acquiescence. Mild acceptance. Could they.. might... they actually be cherishing their own flcalculatiobs of life after Openreach with the task of fast fibering the country to become someone else's problem? Have they already got figures in mind for lower costs and nil govt /Ofcom interference and total freedom to charge customers as they see fit rather than run it past Ofcom first?

When I say they were mild it was an understatement. Their wasno fight in their manner. No attempt at persuasion. They were both very laid back and have been in the online media quotes too.
- Do they see more upside as a lesser but free-er organisation?

They were not fighting their corner. They had a quiet, couldn't care less attitude, emanating from them. Very quiet. I was expecting a more Boris-Johnson-like : We can and we will do this, bit of ramping. But nothing. Nothing at all.

By the way did you catch Jansen being interviewed on ITV late news last night? On BBC beforehand, they had the BT Chairman being interviewed. Never seen Jansen live or heard his voice before. He said instead of Labour's proposed costs, according to his figures the true cost Labour are advising will be more like £100b instead - and £200m in running costs per (can't recall whether he said per year, per month, per week, or whatever period).

I think he could have been a bit more assertive. He could have said eg., We're on it, we're doing it, and we 're going to finish the job, perhaps faster with a few tax subsidies from the govt, but ultimately if we're allowed to complete the task it will be at no cost to the public. But if political parties want to take on board the costs and handle the costs by other means then that's for others to decide.

Just heard on the radio The Lib Dems have said if you vote for them they'll plant more trees.

The tally of bribes so far:

Labour - "Free" broadband

Lib Dems - "Free" trees

Conservatives -???

Personally I'm anybody's for a free box of chocs sent annually from the Inland Revenue for those of us sending in our tax returns before Oct 31st each year.

That's a crying shame and literally has the same effect upon reading it.

In every deal there's offer, counter offer, negotiation and so on. It was always thus.

Thank you Jezza for your opening offer in this early stage of the election.

To gain my vote here's my counter offer:

- I want free broadband (thank you; granted)

- I want free Road vehicle license duty.

- I want a free tank full of fuel once per week.

and

- I want a free box of chocolates posted to me from Inland Revenue for those of us who manage to send in our tax returns before the Oct 31st deadline each year.

I'm afraid the Free box of chocs is a deal breaker if not approved. The road tax I can accept as for those on or below the national minimum wage, same for the tank of fuel - but the free box of chocs is non-negotiable.

Deal?

"...My preference is for OR to be sold to a Pension fund Asap!"

One thing's for certain - the how to get BT out and away from govt interference in it's day to day running of the business has moved from theories and musings on BB/Forums to a clear definition. (OpenReach current set-up seperation, was their initiative not BT's).
And it's clear and unmistakeable and ends all speculation on how to finally, once and for all, get the Govmt out of BT affairs once and for all, illustrated succinctly by Labour -

Hand over Openreach, come out with your hands up and we'll let you go, and no funny business, or the kid gets it.

Well for a bad day news that's a great finish. Smack on the long term 200 day support!

It's been near above it near below it, and after such a day to remain in the orbit of the 200 day average is quite an achievement. Only 3 or 4 days ago it was less than that on news of a Virgin/ Vodafone mobile deal which would move some of BT's mobile customers over to VOD.

Today's bad news, if it ever comes to pass, is tantamount to ripping BT's heart out and saying, you can find your own way home, okay? And it still closes on the all important 200 day average!

Which it was hovering around all week anyway, regardless.

Hi-hi, Yes, and I'm seeing that under the "Enterprise Value" and it's currently £38.97b

- whilst at tonight's close of 193p leaves the MCap at a lowly £19.37b.

In effect anyone wanting to buy BT outright can forget the share price to value BT, with outstanding debt that means the offer would need to start at double tonight's closing SP !

Remember those troubled big companies of yesteryear being sold off for a single £1. Whilst those of us at school checked amongst our lollipop wrappers for a £1 we didn't realise the buyer also had to pay that retail giant's debts of many £billions "enterprise value" too LOL!

" that's circa 50%++ increase - in one year!"

okay 63% up for those checking.

50%+++ up is just more rounded and punchy sounding.

"...Help BT in this humongous task - not destroy and hinder, and that means help meet Jansens 3 conditions which are:

1) A grant or tax subsidies towards completeing the fibre rollout quicker.
2) O... etc., etc.,"

Just in case any Trotskyist-socialists out there are lurking and reading and thinking I'm proposing supporting capitalist organisations at the expense of robbing the proletariat's hard worked taxes, with that quote from my post below, you should know how much this is already costing BT.

I have the full year's fairly accurate net debt for the full financial year to hand. Didn't want to reveal it until I see the 20 House-analysts consensus forecasts for Q3 (more likely revealed next week now) and net profit forecasts to see how my stuff compares to theirs. But I'll jump the gun on net debt now, as have the accurate H1 trading accounts to extrapolate from.

NET DEBT:
Last year Net Debt was virtually £12b @ £11.996b.
That was approx £1b higher than the average over the 3 years prior to it. So much of a muchness.

The forecast for the full year ending next spring is a whopping increase to £19.6b
- that's circa 50%++ increase - in one year!

And no, only a small part of that is due to pension deficit payments (pension debt is not included above and is seperate to that £19.6b by the way).

Guess what the bulk of that debt relates to? And that's why great strides are being made to sell every asset that's not nailed down. (Had a link flashing ascross my phone this morning £300m winging it's way into BT accounts as a sale of assets agreed in Europe somewhere).

Jansen is looking for cash everywhere to pay for this fast fibre rollout. Hence market mutterings that some of the dividends not safe from his eye in the new financial year after (20/21).

This fibre rollout is of national importance and the only govt help it's had is Guiness book of records fines from Ofcom, thus depleting cash reserves further; not helping.

Govt bonds whatever could be done via deals for BT to exchange shares/ whatever - to repay the govt and thus ultimately the tax payer, in any grants or loans that are extrended to BT. Win-win?

But really, leaving all this to one company that's about to shed 13,000 employees and say let's nationalise part of it and make the taxpayer shoulder all the costs from now on, when the FAANGS lawyers wriggle out of paying for the UK's fibre broadband rollout program, is not a guaranteed economical way out of this.

Instead, for bargain basement money just a grant/loan repayable by shares/bonds whatever - to BT, and the govt of the day can take all the credit. Labour has clearly decided BT is the enemy and best left out out of contributing the rollout. The current govt has fined, threatened and warned BT and call it "helping".

Somebody in govt/opposition needs to start taking Jansens offer v seriously or we'll all be paying higher taxes for busted budgets due to political meddling.

Yes, and I bet today all BT's industry competitors are busily rearranging history to clear themselves of being at the forefront of urging Ofcom for more action to do something more radical to BT as they regarded Gavpants back in the day, as too slow and dragging his feet on fibre. That included the greatest ever fine in Ofcom's history against one company - ever.

If that link below is indicative of the horror, BT's competitor's feel at nationalising broadband, and it's effect it will have on them, then maybe if Labour get no traction and BT come out the other end on December 12th intact and in one piece, maybe there will be a general "toning down" of complaints laid against BT by its competitors.

BT and its competitor's know that the UK lags other developed countries in fast fibre broadband and thus they are more prepared than the UK for IOT.

And of those countries, not one of them achieved that by nationalisation. Only one attempt has previously been made at nationalisation "to get there" and that as mentioned further down below, was Australia - and ended disaterously.

Help BT in this humonguos task - not destroy and hinder, and that means help meet Jansens 3 conditions which are:

1) A grant or tax subsidies towards completeing the fibre rollout quicker.
2) Ofcom muzzled considerably to get this task done
and
3) Help with obstructive landowners piling on delay after delay in BT's name.

(How cheap are those 3 conditions in £££'s to the eventual cost Labour proposes; peanuts?!)

BT's way is a bargain to any govt. Roll your sleeves up get in their with grants and help and get the fibre rollout done. It'll be faster achieved than fining BT heavily at every problem encountered.

In exchange for that Jansen has said he will agree to Johnson's mad 2025 completion date, which even Labour don't think credible as they've doubled it to 2030 under their plan.

"Their plan" ergo: See Australia and the end result outcome of their nationalise Broadband plan. Done now. Australia is having to live with the consequences. The only example of nationalisation of broadband. Labour should take heed.