Member Info for Velo

" Australia has tried to do this with its National Broadband Network and it has been branded one of the biggest infrastructure failures in its history. Set up in 2006, the government’s plan was to roll out full fibre to 93% of all premises, although over the years this was watered down to a “multi-technology mix” using different technologies offering varying levels of speed and service to consumers.

“Only one other country in the world has come close to going down this route, Australia,” says Matthew Howett, the principal analyst at telecoms research firm Assembly. “And for a good reason – it’s hard, expensive and fraught with difficulty. Australia’s NBN is years late, massively overbudget and offering speeds and technology a fraction of the original political intention.”

In case anyone's concerned over forecasts by some of 120p then bear in mind VOD has always been awarded a premium P/E ratio by the market, compared to its peers due to its perceived growth leadership potential. So when last year the market "punished" VOD, it only took it down to the industry average which in monetary SP terms, correlated to 124p (think it actually intraday-ed as far as 122p).

Dug this out from a post of mine way back in early 9th Nov '18 last year:

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"... Just look at how the market has brought down the P/E of VOD from the beginning of this year (2018) to tonight's P/E15.4

Jan 2018 VOD was sporting a forward P/E ratio of P/E 26.0 !!!

April 2018 VOD was down to forward P/E 21.2

August 2018 VOD was down further to forward P/E 18.4

And tonight VOD is down to a forward P/E of 15.4

... I ask the question - is the market merely re-rating VOD down to level with it's peers; and thus stripping VOD of its premium rating?.... "

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In all cases above for last year the industry average was then still way below VOD's P/E ratio.

Currently as of 14th Nov '19 VOD sports a great stonking fwd P/E ratio of 20.4 which is way above the Industry average of P/E 11.5 (and the general market average of P/E 12.4).

So bear in mind that relates in price terms to 89.95p - call it 90p.

Don't think in it's baldest mood the market is of a mind to reduce VOD down to the market average P/E ratio, let alone below it.
So calls of only 120p is not undervaluing the SP, because it does by nature ride higher above all in it's industry, and is hardly a long term punishment when true real punishment would have to be south of 90p!

At 90p yes, it sounds dreadful, but to the market, it only means a visit to fair value. I'd panic and worry below 90p. That's based on average P/E's, Some don't like that method, I love it, it's fast, easy, and best used in non-high-flying, hot stocks. I'd worry only if the P/E descended BELOW P/E 11.5.

BT for instance, whilst in the same industry group, has a P/E ratio of 8.09 tonight. Now that's what ahh call under-valued.

As of today VOD, is on a premium of P/E20.4 the SP could drop quite away and still not be viewed as undervalued. It's always been a premium based P/E stock so don't immediately jump to the conclusion it's expensive because of its high P/E ratio.

Was more than pretty sure the first Q3 trading forecast would have been out today the 14th, but silence. So if no update either tomorrow or the beginning of the week then I'm stumped. They've been virtually bowel-movement regular in their motions to date.

2 updates per month without fail. Maybe the H1 actuals has thrown them off stride?

Look at previous date periods between updates:

25 October 2019
11 October 2019

14 days apart. And prior to that:

27 September 2019
13 September 2019
30 August 2019
16 August 2019
26 July 2019
19 July 2019

2 updates per month and for the most part, 14 days apart.

. . . See - if anything - tomorrow.

(Concludes > > >)

. . . It ends up in the FCF accounts and thus it could remain "buoyant" for many a year to come.

After FCFlow receiving much derision since 2018, and after a forecast of a stupendous net debt burden, and a net loss forecast for the full year, will it all be 'alright on the night' and saved by the FCFlow where it couldn't save the divi from being cut?

Needs to, as prior to the results liquidity was okay-ish, but now updated with the H1 results liquidity is more than a bit sorry looking.

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I'm cutting back on posts now the interims are digested, but have an interesting piece I'd like to share on P/E ratios (did one in 2018) for those times when the SP tanks and the voices of the bears appear to hold sway.

VOD has always had a premium P/E ratio appled to it. When the market's in its foulest mood it has only ever 'punished' the SP back down to the industry average. Many a Co. would give their right arm just to be punished back to the average P/E ratio. BT has been seriously under the average P/E ratio like for ever (well since 2016 at least).

So what is the industry average now, and what is VOD's P/E FWD now too, and how far can it fall from that premium rating, before anyone can say it's worse than fair value and undervalued?

Will post those when time allows and then perhaps slope off a bit from posting in general.

The algo's updated my data subscription package this morning for VOD. And with it comes the minty fresh, brand new TTM (12 Month Trailing Forecast) derived not from analysts forecasts but from the latest interims correlated and projected into the future to complete the full year ending - and TWO metrics left me dumbfounded with my jaw on the floor. And not in a good way. No one can predict the future - at least not consistently - so I only post the findings for the perusal for all, and not as my new belief mantra for the full year. (PS. Very bullish, buy piece by the FT yesterday, on my phone) So, opinions will vary.

And the metric that shocked me, was the projected Net Debt for the full year. And it shows Read "losing control" of net debt (according to TTM calcs). It has the net debt finishing the year not as €48b as the latest shown in the H1 results but the underlying debt to continue rising so that it comes in at €59b by the year end.
I'm prepared for a 10% error at most but that is just astounding. A lot of analysts also use these subscription packages to do the leg work for them, as I doubt v few of them run a finger down the accounts and write each result on a piece of paper and/or then copy into a spreadsheet. Is that why the SP has wandered a bit lower? The software algo's have updated in general? Mine took 2 days to update. Is that a coincidence vis a vis the SP behaviour since the results have been digested?
Last year's net debt stood at €26.3b

The H1 result showed with the (market had already expected it) Liberty purchase price now booked in that Net debt now stands at €48.1b as of the halfway period.
So, in general, the thinking is that H1 debt won't be allowed to increase, right?
Well, the TTM calcs have projected the net debt to increase yet further and it anticipates it being circa €59b by the year end!

Worse the full year is forecast to show not a net profit at all, but a Net Loss of €2.183b x

- But all is not lost, it may all be "accounting" as Free Cash Flow is currently showing a dramatic improvement. It was good before, but the new updates improve it further ie., before the H1 result it was showing a Price to FCF of circa 9.83 (The lower the better the score) and that was superior to the industry average. It's now even better this morning at 7.95 How come?

Well, besides all that's been mentioned by other posters, FCFlow also includes amortisation and depreciation, so I expect the payment of the Liberty deal is amortised over many years much like a mortgage so the tax man allows a proportionate cost to escape being taxed each year, so an amount is already deducted before net profit. It ends up in the FCF accounts and thus it could remain "buoyant" for many a year to come.

Continues >>>

Divi's
Food for thought:

The dividend is progressive, right? I take that to mean if net profits are up and good, the company will progessively pay out a good dividend
- where the Co. can afford to, it will.

At H1, VOD has declared not net profit - but a net LOSS.

I'd say a lower divi award, favours the doubters. Think about it. The H1 is a net loss which means all divis paid out just make it more difficult to pay down the debt mountain, and act as an uneccesary drain on the FCFlow.

Last year was an €8b loss, yet dividends were still paid out, can't renember how much - but a year or so back I posted and listed each year up, is it $3b or thereabouts for divis per year on average? Whatever, last year was an €8b loss + divis of €3b and that's circa €11b to come straight out of free cashflow but ultimately it will not help tackle the debt mountain. (Just checked last year's divi paymts were €4b! )

If you were in Reid's shoes and reported an €8b loss last year and reported a H1 loss for this half year, would it be wise to tie your hands in tackling the debt pile by dishing out a generous dividend? Particularily if you've announced to the world that dividends are now progressive, which means if the Co. can it will, but with losses reported - yet again, can it really be prudent to "overpay" because of historic reputation when it comes to dividends?

PPS. Waiting for my subsciption data packages to update VOD in the coming days will then have a better idea of how well Free Cash Flow is doing now the increased debt is shunting through the books. Should be able to ammorotise the debt over many years, which could help paying divis, but consider this:

3 of the last 4 years have been stonking great losses. Only 1 year out of the last 4 actually made a net profit. It's what proved to be the decider in the angry debates on here over the dividends that raged on here in 2018. It had to be cut! Had to.

With a mega debt on the books a more prudent and cautionery dividend outlook should be welcomed and cultivated.

Gerry57 @ ". . . Debt is higher then the x3 predicted and when asked what the current level is, they asked to take that question off line. . . "

Gerry, Yes, and not disputing your dismay over net debt increasing dramatically, but look what the company is receiving in return for that debt, 9and hopefully some attempt is made to haul it in).

The increase in additional debt primarily relates to the purchase of the Liberty deal, so VOD gets the German business and some east European businesses, and just look at what that, means Quote:

". . . Group revenue increased by 0.4% to €21.9 billion, primarily reflecting a return to growth in our underlying business AND THE CONTRIBUTION FROM THE ACQUIRED LIBERTY GOLD ASSETS FOR TWO MONTHS, . . . "

So, what will the contribution be to the top line and the bottom line after a ful 12 months, if after only 2 MONTHS, it helped get revenue to show an increase over last year?

As sentiment rises and wanes the net debt is going to be brought up time and time again in media reports all the way to the finish line for the full trading year ending next spring/ early summer, as it should be.

Not defending the huge increase in debt. But there's debt that's for repairs new plant equipment etc., etc., in other words there's debt that shows no immediate benefit like having expensive roof repairs to your house. The benefits are slow to be realised, if the repairs are undertaken before leaks appear. But in this instance, the debt in purchasing Liberty after only 2 months contrinbution, is mentioned as a reason for the INCREASE in revenue. (I'm more interested in net profit (of which there is none this year :(

- But there is a pay-off for that debt and the pay-off goes straight into the books every single day henceforth.

Repeat: It's not an increase in debt that makes you swear under your breath, like say MOT repairs for your car, because it's for housekeeping and repairs etc., etc., It's an increase in debt that gives an IMMEDIATE contribution to the top and the bottom line.

Time will tell whether Read is spinning us a line or not. But there's debts, and then there's debts for buying an asset. There is a difference - in my view.

"...been invested here for 20 yrs and had no value added for all that time...."

Seeing as you're 'probably' the longest holding shareholder on this forum, I find that interesting, Dalesflyer.

Checked the price history and sure enough going back 20 years the low from back then up to now seems uninspiring, not much happening to any large degree.

But my charts have the dividends, rights issues et al added back in. And there must have been significant dividends you collected in that time, because I then went to Yahoo Finance for the unadulterated SP's back 20 years to 1999. And what a different story!

From 2001 to 2010 VOD could have been picked up in those years for 40p/50/60/70/80p - ish with ease, at any time. So comparing from the first decade of the millenium to present whilst not exciting, is not too bad an increase. Holders in those first 10 years though would have been saying the same as you as not much happening in that first decade either. Then there's the dividends.

Have you ever added or kept records of the thousands of ££££'s in dividends you've recieved in that time?

That's the destiny of big hitting divi shares. Unexciting capital growth in return for big hitting dividends.

Currently, even with cuts to the dividends it still hasn't sunk below circa 5% yield in divi payments.

Wonder if you added dividends received, back into your records you might be a little more cheered?

Well I looked on gobsmacked when I had the time in the afternoon.

4% up

Then 5% up!

Where was it going to end? 170p ???? Almost!

What I'm about to say still holds for the final closing price. And that is a final 3% rise in a single day in a FTSE100 stock is significant, and not to be taken lightly. And still a cause for celebration, despite not holding on to intraday visits up to 169p+ !

My subscription data services package will update today's H1's tarding results in the coming days/week and then I will have a definitive, clearer picture as a whole.

I think the wider market in general was much of a same mind as myself this morning. A bit fazed by the net loss at H1 but accepting of the underlying debt not increasing as the €21b Liberty debt added to the outstanding debt to more or less come in as expected and therefore showed that seperate to Liberty the underlying debt is not running away uncontrollably. I guess with the slow move in the morning the big institutions were watching who in the market was selling or buying. Once it was clear volume was accumulating and no distribuion was visible it was a game of copy-cat as the price just smowballed away - uphill!

A good response, indicating H1 results well received by the market, despite revenue flattish, net debt up, and no net profit but a net loss instead.

You couldn't have asked for a better close by the SP, on receipt of hearing those 3 metrics.

Will be extremely interested what my data package updates reveal for net gearing, liquidity and Free CashFlow when the algo's update.

But all-in-all, a good day. Well done VOD! Steady as you go, is the mantra from the market today.

Mikey. Hmm... Let the full day play out I think before reaching a conclusion on the market's reaction via the SP. If the SP has not reacted aggressively downwards to the added debt because it was expected and has neither exploded upwards because the market is comfortable with a net loss at the H1 point, then intraday, it rather suggests everything is as expected by the market, so neither good nor bad, but middlin', so more or less a no change condition as the market is unsurprised by the results and neither impressed nor unimpressed. A same condition more or less I'm thinking currently, with just a smidgen of bullishness currently on display via the SP.

164 now, Mikey :)

".... but seems results were as expected."

Yes, AW100 at this early juncture of the day, initial reaction in the market appears to support that as the theme for the results. I can go along with that. The mega net debt is for discussion another time, but it looks like they are well cool about it, and were fully expecting to see it finally arrive.

The Q2 net profit in isolation seems to have been accepted as that the company has returned to profit in that quarter alone (where previously the net loss damage all occured in Q1) and are thus accepting that's what they're expecting to see continue all the way to H2 and the year end.

Taking time to reading Vod's own RNS release provided by Mikey and yes, they summarise in the comments section that the increasse in debt is due to the Liberty deal transaction finally arriving on the books. Personally can't get het-up upbout the now staggering weight of debt as it's been well signalled to the market all year. The market can't come on with the victorian vapers on seeing it.
They've known about it.

They were expecting it.

They already have it priced in to the SP.

So I'm not going to over react to the debt (today). What does concern me is the loss where I was expecting a profit. Wether the market was expecting a loss is the big question. If not . . . . then look out.

Can't believe at near v close to this morning's market opening and this site here (LSE) has still not provided a link up above. They're usually **** hot releasing company trading result RNs's.

Ahh I see the huge net debt now (Thanks for the link Mikey) and although it's jumped massively to €48.1b, (Very nearly doubling last year's full year net debt) that's spot on what I was expecting for the Liberty debt when it came through. So not over reacting badly to that, as the market has been expecting that ever since the Liberty deal was struck. It's what the market isn't expecting that it gets upset about, and that huge debt increase which will now sit on the books like the 'Ancient Mariner's Albatros' (Do they still teach that poem in schools :) is entirely expected by the market.

Thanks for the update Mikey. The RNS isn'#t even out yet on this site as I post, so only got your post to go on.

Hmm, Not sure what to make of those results. Reported revenue for H1 barely increased over same period last year. But what has got me scratching my head is "Loss for the financial period of €1.9b" when I thought the market was expecting a decent net profit. Need to see the original report whether that's pre-tax, or whatever.

Until I see the actual report my initial reaction to the data provided by Mikey is not an impressive result. Bit pesimistic on how it'll be received by the market. Any mention in it, of any positive TowerCo progress anywhere?

" The liferaft (220 day ma) is just 2pence away." (Typo was immediately corrected to 200).

The SP marker next to that post down there somewhere, was 191 at the time; hence the sole reason for the post. When it messed about at just over 192 I thought . . . could it. . . no . . . noo. That would entail an extraordinary % gain just to reach 193-ish.

But look at the close - 192.98 ! A 3% increase - in a single day for a FTSE100 stock!!! Sig - nif - i - cant, or wot?

Are you allowed to dance an Irish jig or do you have to go to the back of the queue and only get to dance when you come back with another 00.02p before they let you in?

Tonight it rests just slightly below the important 200day ma. It's not over until the fat lady sings and all that. But a little concerning that it was not able to close on, or generously well into 193-ish.

Pretty sure that close tonight was a Bullish Engulfing candlestick, (a seriously positive signal) so might not matter that it closed just shy of 193. The good news is, if the SP cracks through and closes proud of 193 tomorrow and decides in subsequent days to play above 193, then it's almost confirmatory that this little: ' Vodafone-nicks-BT-customers-in-Virgin-mobile-deal ' inspired bearish down trend is over. And concerns eradicated of lower lows, evaporate for the present.

So, looking like low 190's was "it" (despite sleeping-over in the 180's)

Summary:
All in all, looking good for Tuesday, and onwards :)

Erratum:

"H1 Net Profit of roughly e1.1975b" Tsk!
- Should have been e1.1875b

Typo!

First off, I'm of the opinion that what the market really wants to hear about tomorrow is solid progress on the new TowerCo.
H1 results might be secondary even overshadowed, should any new mention of TowerCo be extraordinarily positive.

REVENUE:
H1 Revenue for last year was: e21.796b

Only have some market estimates to hand for the full year of e45.035b

- So half that. and a ballpark figure of e22.517b for H1 would show a decent increase on last year and be well received by the market if achieved, I should guess.

NET PROFIT:
H1 Net Profit for last year was: e7.965b LOSS!

All that's changed for this H1 and again only have the full year market estimates so e2.375 halved, is e1.1875b net profit.

So: H1 Revenue expecting roughly e22.517b
&
H1 Net Profit of roughly e1.1975b

That's the two metrics I'm zeroing in on tomorrow.

Both should be showing a clear increase over last year, and I'd expect the SP to react favourably if results achieve those or better - exceed them.

More concerned with the big debt from the Liberty acquisition though. Don't think the actual monetisation debt has threaded it's way through to the accounts yet. Maybe tomorrow is the big reveal? It would instantly propel the net debt to virtually the equivelant of double the Market Cap of the entire company!

That's like selling your house at a fair market price only to be told you owe the same amount all over again to conclude the deal. Whatever, look at what VOD gets in exchange for that debt.

It's not a millstone debt - Vod gains valuable assets in exchange!
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If anyone has any of their own revenue and net profit figures it would be interesting to hear them. Whatever, the waiting and guessing is over circa 7:00am+ tomorrow morning.

"don't use the f word though!"

Can't see what's troublesome talking about fibre cables