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Ive seen many posts over the years saying vod divi nothing to do with share price but completely sustainable because......
Would one of the experts care to explain.
Its cayse the share price has fallen that the divi... pence as percentage of share price seems high. If vod was valued at 130 div would be 5.5 pc for example.
So if in vod for income, and if never sell, you are getting 10pc. So everything depends on divi being kept at this level.
You dont even need a rising divi as 10pc is a return plus inflation beat all in one.
It seems to beat recommended funds as well, as cty, 3 or 4pc divi and capital price lower than many years ago.
Don’t forget most are not getting 11%
Their average is probably into the £s
The big question mark with Vodafone is will the dividend be maintained? The finances are super hard to understand, with things like working capital deducting from the half year free cash flow and then adding back into H2/FY free cash flow:
https://docs.google.com/spreadsheets/d/e/2PACX-1vSNxkKmgR2PzSL1NH5uvhJAIl6TyUm-PpH2hChEFWELeB8mLB-V562E7qRdDL0lOSa8NyAUBbokBjVp/pubchart?oid=642584807&format=interactive
The chart below shows the FY key figures affecting Net Debt and Free Cash Flow:
https://docs.google.com/spreadsheets/d/e/2PACX-1vSNxkKmgR2PzSL1NH5uvhJAIl6TyUm-PpH2hChEFWELeB8mLB-V562E7qRdDL0lOSa8NyAUBbokBjVp/pubchart?oid=325944045&format=interactive
Much will depend on the effect of recent disposals and the possible disposal of Italy.
Fleccy you must be confident you splurged £20k this week on vod?
I'm confident that Vodafone wont go bust, I'm on the fence as far as the dividend sustainability's concerned. The £20k top up was all about reducing my average cost per share, the dividend yield came a very distant second in my thoughts.
On the Working Capital vs Free Cash Flow chart I only went back to H1 2022, but it gives a clear picture of the fluctuations in Working Capital and its effect on FCF; If FY24 plays at the same as previous years, then the deducted Working capital should be reinserted into the figures with a subsequent rise in the FCF at year end.
The second chart shows the key figures relating to EBITDAal, FCF and Net Debt. The chart goes back to FY15/16 and nicely shows the relationship between acquisition's, disposals and Net Debt, note the increase in Net Debt with the Liberty acquisition in FY19/20 and the reduction in Net Debt with the disposals last year in the FY22/23 figures. Taxation and interest paid/received are pretty much stay unchanged year on year adding up to a deduction of around €2 to €2.5 Billion per year. Free Cash Flow correlates with Spectrum and Licence's, so in years where Vodafone have to pay out a lot for spectrum/Licence's it shows in the Free Cash Flow figure. The biggest year on year deduction from EBITDAal is Capex, so if Vodafone can find ways of reducing that it'll feed into the FCF and Net Debt figures. Here's the spreadsheet showing the yearly figures, it has three sheets, accessible by clicking on the three tabs in the top left of the sheet, the three tabs are Vodafone Financials, Cash Flow and Working Capital vs FCF. I have no idea what effect the disposals will have on EBITDA, FCF and Capex, so it'll be interesting to see what comes of the changes. I'm not an accountant, so if there any on here I'd welcome their opinions.
https://docs.google.com/spreadsheets/d/e/2PACX-1vSNxkKmgR2PzSL1NH5uvhJAIl6TyUm-PpH2hChEFWELeB8mLB-V562E7qRdDL0lOSa8NyAUBbokBjVp/pubhtml
Hopefully an announcement re Italy sale due soon. Payment down of a further chunk of debt.
How will the debt be restructured when the merger with three finally happens. I know the debt will be reduced by then but tiwill still be high. I was looking on dividendmax and Vod has always paid a dividend even thru some of the bad times so im confident on future dividend payments and hopefully a proper rise in share price?
"£4.3 billion debt from Vodafone"
"£1.7 billion debt from CK Hutchison"
"Vodafone UK and Three UK are contributed with different debt amounts at closing to achieve a 51:49 ownership split (no external debt)"
"Initial debt contributions to be ~£6 billion"
"Financial effects Leverage neutral + FCF accretive from 4th full year"
https://investors.vodafone.com/sites/vodafone-ir/files/2023-06/vodafone-uk-and-three-uk-investor-presentation.pdf
Three years after completion, Vodafone will have the right to acquire CK Hutchison’s 49% stake in MergeCo
(“Call Option”), and CK Hutchison will have the right to sell its 49% stake in MergeCo to Vodafone (“Put
Option”
Sounds like a double bubble fee bonanza for takeover and merger lawyers. Fees from the mergers which takes merge till 2029 to become FCF accretive. Fees from the purchase. Fees for the bond sellers who raise the new debt to buy back what they sold off to mergeco.
If they didn’t waste money on divs and buybacks they could buy out Hutchinson for cash today.