If they make me the money... I don't mind about the fees etc. 3.4 Bil isn't a small number and I trust the management must have seen something in the deal.
Printable View
If they make me the money... I don't mind about the fees etc. 3.4 Bil isn't a small number and I trust the management must have seen something in the deal.
I didn't know this
http://www.sharechat.co.nz/article/b...ay+14+May+2019
"The company, which will this year start offering mobile and fixed-wireless broadband services through a partnership with Spark New Zealand, said its retail gross margin climbed to $156 million from $148 million the year before."
I'm a bit perplexed at this one, I think the telco's are really at the end of the line and at the 'sunset' as an industry. Not saying they will be obsolete, but the products they sell are becoming more and more homogeneous and its easier for someone to come in tomorrow and just eat your lunch. High CAPEX spend, very low growth opportunities in a already small market.
Unless, they are seeing an opportunity to flip this over in a few years due to it being an under performing business which they are indicating from the presentation, its very risky because another competitor comes in tomorrow and that throws off all your fancy discounted cash flow calcs and enterprise values.
Charlie Munger once said that EBITDA is like saying, earnings before all the important stuff. I'm interested to see whether there is enough there in terms of cash generating to suffice. I'm skeptical but then again, I'm not sure many picked them to turn around Z Energy.
Hmm
" its easier for someone to come in tomorrow and just eat your lunch."
I'm not sure about this.
Someone would need deep pockets & knowledge on building another telco brand
https://www.stuff.co.nz/business/ind...rategy-working
What has it cost 2 degrees so far to set up + the value of lost return
Goodwill is often worth every penny
Although I agree on the high capital costs. I'm concerned that there isn't any chance to grow in the industry, its a race to the bottom really. Offering more data, minutes and continually lower prices is the way to go to attract new customers, and in such a small market population wise you're not going to magically grow your customer base by thousands. Revenue grew about 1% between FY16 and FY19 according to one of the slides.
As for goodwill, its rough for Vodafone https://www.nzherald.co.nz/business/...ectid=12161252
https://www.newshub.co.nz/home/money...customers.html
I'm a holder of IFT, so I'm attempting to be optimistic. I'm assuming all the upside is in stripping down costs, and sharpening up the product leaving it in better shape than you entered before ultimately exiting for a profit.
You never know this for sure, there are sometimes ways to create blue water (an unexplored new market.)
Maybe something special using 5G , I have no idea.
Anyway, I agree I think it'll be a challenge for IFT to do a Z with this one. But maybe they like a challenge.
Trustpower is small bikky when it comes to telecoms. It is also one step above an amateurish level. I know because I tried it for 2 years recently and could not wait soon enough to get off their broadband. When I did, my line speed jumped up 30% and my connection reliability tripled (at least). If IFT integrate TPW services with Voda then it has to be an improvement. As to current wireless broadband and mobile services with Spark then they cannot be expected to last long but must surely be replaced by Vodafone services. IFT will have calculated all the ins and outs of doing this.
Telecomm service providers are definitely in transition. Basic communications are too cut-throat for a company to make it the only line of business. Spark are becoming a content provider while retaining its mobile, backbone network and international fibre services. Voda tried and failed to join with SkyTV. IFT through TPW is selling bundled power/telecomms/gas connections and is now building out the telecomms with Voda. I would not be surprised by a new attempt in due course by Voda/IFT/Brookfield to takeover SKT (never really was a merger) since SPK has now developed very competitive services over broadband while SKT keeps on losing its market.
Before IFT made Z what it is today, I'm sure many would have wondered what could a company do with a fuel retailer? Its a basic good and service, but if theres one thing IFT is good at its the customer service and experience. They know how to build premium services that people will pay for, while at the same time finding great efficiencies, this is where the profits are. As it stands Vodafone have a fragmented system where customer get frustrated dealing with them, there brand is well known but doesn't have a premium branding feel that Spark and 2 Degrees have built, but they are quite good on the sales end hence why they maintain their revenue levels given the current competition.
What IFT has to do is refresh the brand, create a clear but flexible system and find more added services. Given they have access to Trust power there is a lot of combinations. Vodafone could introduce power to all customer plans, offer cloud storage, sell electronic products, security systems and many others. What you have to recognize is they have underutilized selling power to a large customer base that already trust their offerings, but theres too much anchoring in everyones minds to think about this company is solely a telecommunications company rather than a wider and more general technology service company. Big reason Telecom had to rebrand to Spark, but I think here they will keep the Vodafone brand.
INFRATIL WANTS VODAFONE FREE TO CHASE DOMESTIC STRATEGY
the key points in the article
Bogoievski said Infratil entered the deal with a very long-term view
Infratil wants to free Vodafone's management team from the constraints placed on them by the global group
(how they will get some earnings growth)
Bogoievski said he thought regulators, policymakers and Vodafone's customers understood the need for the need to cooperate and share new technology, rather than needlessly duplicate investment.
( wonder if they mean they want to share cost of 5g build with spark etc)
http://www.sharechat.co.nz/article/4...-strategy.html