Thanks for the opportunity mate! Seems like she hadn't had a TA trader before???
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24 November 2021 Tower announce a $30.4M capital return: https://www.nzx.com/announcements/383421
01 March 2022 - Final Court orders received: https://www.nzx.com/announcements/388186
08 March TWR shareholders hit pay dirt: https://www.nzx.com/announcements/388590
So a process that took about 15 weeks.
Sky may opt for an on market buyback, but I do still think that they should take a similar approach to TWR given $55M of our cash came from an asset sale.
Let's say they announced their intention to do a tax free capital return payment next Weds 22 June. Based on the TWR timelines, we could expect to receive out payment on 05 October 2022.
That works out well too as we would have just received our dividend payment in September. So they can pay the divvy first and then cancel 1 in 10 shares and pay out the $55M.
This is the most efficient way to return capital to shareholders in my view and gives us the most options. If you want to increase your ownership in Sky when you receive the cash then you can do so. If you would prefer to use the cash for something else then you can do so. Maximum flexibility.
I anticipate a $55M tax free payment plus a $35M fully imputed dividend. A very tax efficient way of handing over the cash.
And that should still leave Sky with around $60M. Plenty of cash to invest in the value accretive things we would expect, such as:
- Increasing broadband uptake
- Increasing investment in the new STB to add new features etc
- Entry into Mobile
Thanks MistaTea, that is great info. Hope someone in the media can mention this so the board and management get a gentle reminder that this divy and captial return process can take some time.
Honestly the best thing Sky could do on a fundamental level to protect its long term future as a high margin content provider is to create some form of popular exclusive content (easier said than done!). If they cant do that then yes they need to keep expanding into other revenue generating areas that are not in structural decline.
Its amazing how there are now a bunch of businesses who are expanding outside there core area to offer bundles to get customers, often offering the bundled extras at not much above cost to attract/retain there core customers . Sky of course is offering broadband.
I was personally looking up trustpower Power+broadband+mobile offers yesterday to switch to (they also offer an additional amazing deal on free or almost free appliances - got my eye on a $2,5000 fridge that will only cost me $300 if I sign up).
Now consider slingshot: who have Broadband, Mobile, Power…..and now is offering insurance!
Eventually everyone is going to offer everything it seems.
Which brings me to the question - all these companies are reselling these bundled extras supplied by 3rd party providers, so should Sky consider changing its place in the supply chain? Rather than merely competing with all the other bundlers, should it also be offering its product to others as a supplier? Letting other power, broadband, mobile etc providers offer sky content as part of 12/24 month fixed term bundle plans seems like it would be a great way to reduce churn while also letting your competitors subsidize your product for their customer base, while also potentially reducing sky advertising & customer support costs (as all these other companies will promote the sky bundle deals and handle customer billing themselves.).
Sky has 174,688,323 shares outstanding.
So a $35M dividend paid in September would be 20cps.
Then if they cancel 1 in 10 shares for a $55M capital return (payable in October or November depending on how long it takes Sky to get their act together)...they would cancel 17,468,832 shares. For each cancelled share, Sky would pay the owner $3.14 ($55M/17,468,832).
Easy, relatively fast to execute...and shareholder friendly.