VOD discussion




Please forgive me just I’m struggling to find a thread that is just about VOD rather than the million and one other things. It’s all Brexit Wars, Election etc etc posted on multiple ‘boards’ so an abundance of comments, precious few to do with VOD specific.

If there is a pure VOD thread already out there please let me hook into that one and happy to delete this.

Just VOD please.

My current conundrum - is this dividend sustainable? I’ve flipped from thinking yes, to no, now… cashflow, cashflow, there’s enough for the dividend but what cost 5G and how to fund that? More debt? Not sure it can handle it (as in No, I don’t think it really can)

ITDYA, hating multi-share threads that come top of any search here these days.


Most seem to be waiting for the divi’s haircut (50/50 IMHO); the divi is barely covered.
It also han’t had a divi cut for over 30 years… so they are reluctant to do that.



Last set of numbers said EUR 5.4bn free(?) cash flow covering a 15.07 cent per share div, i.e. just under EUR4 bn. But at the same time net debt went up by just under EUR 1.5bn… I’m not a guru accountant but I can usually count pretty well; not sure I can read these numbers correctly despite the fact I’ve been reading accounting numbers for 30+ years!



If you use the standard (traditional) ratio for divi cover… it is not impressive.
If you use the creative ratio that companies use when the standard one tells a bad story (as VOD do in their accounts) then it’s not so bad.



Generally agree. Liberty Deal, if passed by EU, will cost a significant $22 billion. Any optimised increase in revenues from that could take a few years to fully materialise. No wonder the market is distinctly bearish on the degree of risk involved, including a possible substantial dividend cut, before those goals are reached.

Huge debt tends to be ignored by much of the market as long as fundamentals remain fairly robust. Once they deteriorate, for eg. drops in revenues, markets soon get spooked. Then high debt is seen as negatively as it really should be seen even in good times. Stocks with high debt should always make investors more cautious.

FWIW, I still hold a very significant chunk here as posted in another VOD thread, shares & longs. Poor result on 6th May, ie. beyond what seems to be priced in, may well see me take a substantial hit (at least on the leveraged side) & make a complete exit from VOD. It’s an action I rarely take. Naturally no advice intended to any passing readers.

If I did take the hit, it’d be another expensive lesson learnt on my part. In this case, never touch stocks with huge debt as it doesn’t matter how rosy the picture may look on the surface, if that debt is allowed to increase, it portends of potential far more serious problems ahead. - GL.

Edit: typo & correction to date of VOD’s results. They’re on 14th May, not 6th May as I mistakenly wrote earlier.


With a stock like VOD you need to prepare for a bit of volatility. It is in a fairly competitive market but the fight for market share will always be an expense in a saturated market plus there is the cost of keeping up with the developments in communications technology as with the roll-out of 5G. You will never lose all your money with VOD. For me a keeper.





Thank you all. Some external input to digest. @J_Westlock, I hear, accountants do have a habit of trying to manipulate numbers when ‘instructed’ to do so… but FCF is the one that is the hardest to play around with (so frequently the first one I look for).

Anyway, thanks. Any chance keeping this thread pure?.. 14/05/19 is the VOD date in my diary, can’t find anything for the 6th? Curious.



Yes, agreed FCF measures how a business is actually doing.

It isn’t the same as I referred to of course… which was the divi cover ratio ie. the ratio of a company’s earnings per share to the divi per share… which for VOD is woeful.



You’re correct. VOD results are on 14th May. My error & an apology for any confusion caused. I must have confused dates with one of my other interests. Will edit that part accordingly.

As I’m sure you’ll all know, EU decision on Liberty Global deal due 2nd May. - Cheers.



They’ll try to say no. Initial will be no. I think the market has that priced in already. I believe it will get done in the end just not 2019.

Nothing to do with business, everything to do with politics.



Correction to date above. Liberty Global deal deadline has since been extended to 3rd June, with further extensions possible. Quote & source below. - Cheers.

“The commission currently has until June 3 to rule on the transaction, according to its online register of notified mergers. The deadline could be pushed back if the acquirer draws from a pot of extra working days. At this stage of the review, the regulator would have to agree to an extension.

Vodafone said it still expected to receive "final approval in the middle of this year,” its statement said.”



@jackdawsson, thanks for that link, I hadn’t seen it. It actually reads much better than I had anticipated - IMO the EU tends to be very conservative (pessimistic?) about any major change to the landscape in it’s attempts to ‘protect it’s citizens from outrageous, unrestricted, exploitative capitalism’ even though they do frequently have a point!

Shouldn’t be a major concern here for me but then my opinion doesn’t count for much. Good that the EU recognise Netflix (and by definition other providers) in the equation - hard to argue VOD could really out muscle Netflix , Amazon etc in a bun fight.

Aside, still slightly concerned about the financing of the deal - I’ve read a fair bit but not sure of the full impact.

ITDYA in wait-and-see mode, anticipating a formal EU objection if only as a negotiating stance to justify their costs in the review… I am such a cynic.



Thanks for some VG points & you’re welcome. Maybe of interest, link below gives a reasonably detailed overview of key factors behind Liberty Global deal, including how VOD intend financing it. Despite taking on more debt, on the surface it seems manageable enough. But market obviously unsure what impact it’d have on future dividends if VOD’s fundamentals deteriorate further. Hence the recent sell-offs. Aside from quote below, link is well worth a gander.

“Vodafone is funding the deal using existing cash, new debt and by issuing mandatory convertible bonds. The company has said it will remain within its long-term net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio range of 2.5–3.0x after the purchase, albeit it at the upper end. Importantly, Vodafone reserves the right to repurchase the shares issued as a result of the bonds (when they mature), meaning existing shareholders shouldn’t see their stakes diluted as a result of the deal.

The deal, if completed, will be Vodafone’s biggest acquisition since it bought Mannesmann in Germany for a record £112 billion in 2000."

FWIW, looking ahead to results on 14th May, of note is that VOD’s highest closing SP since the sharp sell off to near 10-year lows of 131+ seen early March, was 146.76 on 21st March. So a lot of resistance near that level since.

If results are good enough to break past that resistance & see consolidation, I shall continue holding all I have in VOD for original higher targets, ie. both shares & leveraged longs. However, if we see more disappointments not already priced in, I shall review things accordingly & rule nothing out. Some flexibility is key, especially with leverage. - Regards.


With VOD’s SP meeting resistance at a poor circa 144 for months, results on 14th May seem more significant than usual. Not that my optimism hadn’t already diminished over past weeks, but scouring the net doesn’t make great reading for those of us holding. I hold shares & leveraged longs. I may reduce latter exposure significantly if Tuesday sees this sold off again. A scenario that’s far from certain.

I don’t subscribe to The Times, but gist of their link is obvious enough. If accurate, that may even help boost SP as market sometimes sees divi-cuts favourably as a proactive measure in reducing debt faster.

The 2nd IG link, from which I quote a key part though more inside, also leaves one feeling that perhaps the best we can hope for is that these quite awful forecasts, if nearly accurate, really are priced in. - GLA.

Quote "Vodafone’s results preview: what does the City expect?

Vodafone is expected to report a 19% fall in annual earnings, to 9.5 cents per share, while revenue is forecast to fall 3.7% on an annual basis, to €44.9 billion. It has beaten earnings forecasts in five of the last eight reports, but missed on revenue forecasts in five of the last eight.

Earnings estimates fell steadily throughout 2018, bottoming out at around eight cents in early 2019, down almost 50% from the 2018 peak. Since then they have recovered, but the cautious outlook persists."

Dividend To Be Cut To Pay For 5G?

Disappointing day, but a small sliver of hope in that 131+ support & a long-term low from 4th March, just held despite being retested a few times today. SP closed 131.78. So all down to Mr Read tomorrow. If his forward guidance impresses markets, we may well regain most of today losses even with a large dividend cut. Frankly, I daren’t hope for much more.

Anything worse than expected & it could be quite a long time before we see meaningful recovery from levels lower than 131. - GLA.


I’d expect tomorrow to be a huge day, can see a massive SP reaction going either way depending on results + dividend.


Down 8.5% in US now! ouch!


Hi Lastemporer,

I expect so too. As you note, omens aren’t brilliant. Indeed, US Nasdaq saw VOD tank heavily tonight. Volume also well above average in the US as here today. That suggests some major funds reducing significantly.

FWIW, as far as overall stakes go, ie. real shares & leveraged longs, VOD now my largest financial exposure to any single stock. It was LLOY until recently. So certainly a huge day for me.

At a tangent, if The Times report about dividends being slashed proves to be spot on, it makes one doubt the integrity of insiders at VOD. Has there been a leak? Leaking key info prior to results is strictly against FCA regulations, though it’s also very hard to prove. Whilst no-one can be sure that’s happened here, patently some large funds have taken recent press reports very seriously indeed. - Regards.


Results fairly poor overall but presumably not unexpected, so hopefully mostly priced in. Ditto the dividend cut of just over 40%. But mindful that markets can be highly irrational, it’s hard to be confident either way. We find out soon. - GLA.


Initial market reaction does seem to confirm this! It is as if the final results were out yesterday rather than today! Hmmmmm…makes me wonder …