Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Altmann Z score doesnt work for a regulated business. A condition of operating in a regulated market is to take debt and create jobs in perpetuity. Spectrum doesnt wear out... Credit Suisse havent exactly managed their operations and leverage very well and looks like the desperation of a drowning man/ woman. Having said that, mdme Lagardes sun tan seems to be fading. SP will track gdp from here imo
I followed Toffs posts and he has a knack of showing up at the bottom just before a SP rockets. I remember him calling £10 on IMB and its now £20! I hope his appearance here heralds a recovery in the SP.
The div, ex div 24 Nov, is easily covered by discretionary free cash. Earnings per share are growing. Lots of asset/ portfolio proceeds to smooth out the glide path for sustainability. No near term liquidity issues. Price rises easily operationalised in 6 european markets next year underpinned by cost management initiatives. Expanding in African markets using the partner markets model takes full advantage of the brand, values c€20Bn.
Net Assets c€57Bn at last statutory accounts is the lower of cost and net realisable value at 31 March. All the recent valuation work seems to underpin that. Think the market has the problem eg like mesh says, margin calls. VOD has no problem funding cheap debt imo
Mikey, a nuclear war would wipe out all subscribers, not just Vod subscribers.
I imagine communication infrastructure would be afforded a certain level of protection and I am sure core physical infrastructure can withstand significant bombardment.
As Del boy commented on 'the russians are coming' and building a nuclear bomb shelter....'The end of the world could be just the break we’re looking for! Oh we’re pretty shrewd Rodney. '
Kiom, the Vantage deal kills any short term concern even though there is no short term liquidity issue. Discretionary FCF is holding up and VOD has confirmed €5.1Bn
Vod operational metrics are good and on plan. Debt markets are worrying about high interest rates. As long as the cash keeps trundling in I bet VOD recovers like IMB and BATS.
'High inflation is the best way to erode the true value of debt hence why the debt pile is not seen as a problem.'
Good point jetcrowts. @10% inflation it will have reduced by 50% over 8 years. In 8 years time, the remaining debt is services at less than2% coupon.
Think the market wanted the vantage cash in 2022 not 2023. It might still hit Q4 though...
Pokerchips, they are also expanding in other markets which are just developing. Vantage is a logical next ' economic' step in a regulated market. Consolidation in that market is also the next logical step. Tele ons has always operated like this hand in hand with the regulators and trade organisations
FY fcf guidance is slightly down in the middle of the worst global recession for a long time. Vantage cash is more than sufficient to pay any near term debt and 50% debt is serviced at less than 2% coupon over 10 years out. No liquidity issues and more strategic initiatives landing. Probably the most important initiative is market consolidation and securitisation of subscriber (market) revenues. Ofcom historically leads the way so the VOD 3 UK deal will be important confirmation. I suspect Reed is also weeding out low margin/ loss making activities like wholesale trading and covered that with the slight reduction to FY fcf ie concentrating on sustainable service revenue and fcf
I think its a gift for those who want income and prefer equity over fixed products long term.
Market wanted vantage monies that now support the long term plan into next year and beyond.
Pressure is on for market consolidation now
We continued to make progress with our strategy during the first half of FY23 and highlights include: further deepening our customer relationships with lower customer churn; good results from our increased capital investment with improvements in network quality; increasing penetration of financial services in Africa; and another successful year of digital enabled efficiencies. ...
'we are systematically executing our organic growth strategy and making significant progress with our proactive portfolio management plans; we have significant action plans under way to mitigate the challenging macroeconomic backdrop; and we are committed to improving shareholder returns through our long-term organic strategy.
Our action plan to mitigate the current macroeconomic challenges includes price initiatives and an extension of our ongoing efficiency programme. Price initiatives have been implemented in 12 out of 13 European markets and include contractual price increases, reduced promotional discounts and new ARPU accretive product portfolios. We now have 7 European markets with inflation-linked pricing structures. The extension of our efficiency programme will generate over €1 billion of additional cost savings by FY26 through streamlining and simplifying our group-wide structure and further accelerating the digitalisation of our operations.'
Not bad interims
Group revenue growth of 2.0% to €22.9 billion, driven by service revenue growth and higher equipment sales
· Operating profit increased by 12.0% to €2.9 billion, reflecting a higher share of income from associates and joint ventures and lower depreciation and amortisation
Due to startup costs in Ethiopia. H2 outlook good.
Growth stock :)
https://www.marketscreener.com/amp/news/latest/Vodacom-sees-higher-H2-profit-after-hit-from-Ethiopia-roll-out--42302280/
jed, hoping that the div is increased slightly. The Vantage deal retains 50% under VOD control so Reed sees future value whilst paying down debt. I assume the div policy should be on the same glide path and therefore increase from 4.3 cents + [2%] say..that would be a strong message and reflected in SP
KKR and GIP Nab a $16 Billion Telecom Consolation Prize https://www.bloomberg.com/opinion/articles/2022-11-09/kkr-and-gip-nab-a-16-billion-telecom-consolation-prize-from-vodafone?leadSource=uverify%20wall
VOD could roll the debt but why would it? Nothing much to roll in the next 3 years,.
€10Bn net cash position, €7.6Bn in unused facilities, VOD Hungary proceeds, Vantage will reduce debt a few €Bn next couple of weeks, turned down €11.6Bn for Italy. €5.3Bn fcf per annum. Strong liquidity position.
its interesting that c.25% of VODs debt is not due until 2030 to 2040 and another 25% not due until after 2041. So +50% in the next economic cycle. And when you look at the coupon on that debt, alot of it under 2%. There is very little due in the next couple of years.
In the meantime they are still guiding €5.3Bn FCF with +2% service revenue growth, inflation indexing built in and the dividend looks safe for FY23 and beyond imo.
Happy to take the dividend while the screw turns on the asset valuations/ sum of the parts and europe and africa are growing. When country gdps recover, VOD recovers without increasing fixed/ capital costs imo. Also network cost initiatives like the vantage sale offer the prospect of paying for what VOD uses rather every room in the hotel, occupied and unoccupied (depending on % investment they sell). Maybe we get a special dividend for all the pain of the last 5 years whilst losing a couple of €Bn vantage debt off the balance sheet. Hooraah! NOV 15 cant come soon enough
https://investors.vodafone.com/debt-investors/financing-strategy
https://investors.vodafone.com/debt-investors/bonds-outstanding-eu-and-us
its interesting that c.25% of VODs debt is not due until 2030 to 2040 and another 25% not due until after 2041. So +50% in the next economic cycle. And when you look at the coupon on that debt, alot of it under 2%. There is very little due in the next couple of years.
In the meantime they are still guiding €5.3Bn FCF with +2% service revenue growth, inflation indexing built in and the dividend looks safe for FY23 and beyond imo.
Happy to take the dividend while the screw turns on the asset valuations/ sum of the parts and europe and africa are growing. When country gdps recover, VOD recovers without increasing fixed/ capital costs imo. Also network cost initiatives like the vantage sale offer the prospect of paying for what VOD uses rather every room in the hotel, occupied and unoccupied (depending on % investment they sell). Maybe we get a special dividend for all the pain of the last 5 years whilst losing a couple of €Bn vantage debt off the balance sheet. Hooraah! NOV 15 cant come soon enough
https://investors.vodafone.com/debt-investors/financing-strategy
https://investors.vodafone.com/debt-investors/bonds-outstanding-eu-and-us