SKT Sky Network Television Limited.

[Dlownz]

I would be in favor of a buyback, way to many shares currently available and would bring some stability and not see thousands of shares for sale. Have a feeling they will opt for a dividend, as a dividend will be more appealing to future investors.

Share consolidation with a dividend.
Two birds one stone

[tqtq]

Share consolidation with a dividend.
Two birds one stone

A buyback or consolidation + dividend are both good options. I wonder which is better for investors?

[Dlownz]

A buyback or consolidation + dividend are both good options. I wonder which is better for investors?

I never really got a answer to how much a share consolidation costs so it depends. If say it costs 10mil to share consolidation vs buying shares then it's going to be better value to do the share consolidation as it works out a lot cheaper. Thoughts...??

[ba9]

I think sky needs to be working on executing/optimizing their Broadband/Sky packages. Rather than worry about Vocus. As Vocus also serve a lot of Business customers. That is whole different ballgame.

Also focus on signing up more sports content. Examples -F1/NZCricket/Football/EPL going forward. In my case, i now have to subscribe to spark sport for Cricket, albeit for a short time. A lot of friends i know have signed up-to Spark sport. Just puzzles me, as there is hardly any content.

If executed well, this will definitely make a positive difference to the share price.

A dividend in the near future may not bring much to us shareholders. But, Yes might bring in new investors in the short term.

[Snoopy]

I never really got a answer to how much a share consolidation costs so it depends. If say it costs 10mil to share consolidation vs buying shares then it's going to be better value to do the share consolidation as it works out a lot cheaper. Thoughts...??

There are no imputation credits on the Sky books due to accumulated losses. That means buying back shares is more 'capital efficient' than paying dividends. In a consolidation, the more shares bought back, the less shares are left to distribute company profits to. So earnings per share will go up, even if company profits in dollar terms are flat. That is good for remaining shareholders.

As far as share consolidation goes, I have never heard of the cost of the exercise putting off a consolidation happening. In theory, it makes no difference to shareholders because the share reduction is proportional for all shareholders. The same profit is shared over less shares on issue. The two effects 'More profit per share' and 'less shares overall' exactly balance each other out.

SNOOPY

[winner69]

There are no imputation credits on the Sky books due to accumulated losses. That means buying back shares is more 'capital efficient' than paying dividends. In a consolidation, the more shares bought back, the less shares are left to distribute company profits to. So earnings per share will go up, even if company profits in dollar terms are flat. That is good for remaining shareholders.

As far as share consolidation goes, I have never heard of the cost of the exercise putting off a consolidation happening. In theory, it makes no difference to shareholders because the share reduction is proportional for all shareholders. The same profit is shared over less shares on issue. The two effects 'More profit per share' and 'less shares overall' exactly balance each other out.

SNOOPY

Snoops - SKT have $146m of available imputation credits (AR June 2020)

[Snoopy]

Snoops - SKT have $146m of available imputation credits (AR June 2020)

Thanks for the correction. I just assumed with all the write-downs all retained profits would have been extinguished. If a positive imputation credit balance exists, then it makes just as much economic sense to pay a dividend as it does to do a buy back.

SNOOPY

[mistaTea]

Thanks for the correction. I just assumed with all the write-downs all retained profits would have been extinguished. If a positive imputation credit balance exists, then it makes just as much economic sense to pay a dividend as it does to do a buy back.

SNOOPY

I think it comes down to how undervalued management feel the company is. If the current 16.6c/share is a 50% or greater discount to their estimation of intrinsic value, then I think a share buyback is a no-brainer.
Sure, the imputation credits will reduce some of the tax burden on shareholders if a dividend is declared...but it will only reduce it, not eliminate it.

Dividends are ****e, they should only ever be paid out to shareholders when buybacks are not favourable to existing shareholders and the money can not be reinvested back into the business for growth in a meaningful way. It is such a tax inefficient way to return money to shareholders.

I would much rather a share buyback at these prices so that I can own a bigger slice of the pie.

Let's say that next year there is $30M that is distributable to shareholders. Management could still easily buy back 150M shares (the SP would likely increase somewhat once a buyback was declared, so 150M shares would be if they bought $30M worth of shares at an average of 20c/share. Just being conservative on how many shares could be bought back on market - not a prediction on how the SP would behave ).

That would reduce shares outstanding to ~1.6B - close enough to a 9% reduction.

Then if the business continues to execute well on the strategy, increase EBITDA...it would not be totally lunatic to expect the SP to increase further over time.

Once the SP hit a level where a buyback was no longer favourable to existing shareholders relative to a dividend...then I think a share consolidation would have more merit.

Let's say in this hypothetical, the SP has hit 30c after the previous buyback and more progress with broadband etc. Shares outstanding = 1.6B.

Well you could do a 4:1 consolidation. The shares outstanding reduce to 400M (all of our shareholdings are reduced by the same proportion, so we are no 'better' or 'worse' off).
BUT...all things being equal, the quoted value per share would quadruple on the smaller number of shares outstanding. So the SP should 'rocket' to $1.20. The benefit here is that Sky would no longer be a 'penny stock' and that could potentially start to attract other large investors who are not allowed to invest in penny stocks.

My two cents + GST for what it is worth!

[winner69]

Could do a prorata buyback ...every shareholder participates (no choice)

But that would be dumb so soon after extracting cash from poor shareholders ...and do they actually have excessive amounts of ‘spare capital’ to return

If Martin bonus is TSR related a buyback would help get it

[mistaTea]

Could do a prorata buyback ...every shareholder participates (no choice)

But that would be dumb so soon after extracting cash from poor shareholders ...and do they actually have excessive amounts of ‘spare capital’ to return

If Martin bonus is TSR related a buyback would help get it

I think they are expecting to have surplus cash from operations in the second half of the 2021 calendar year.

By then most of the large CAPEX for the transition would have been spent and the $100M bonds repaid (which was the purpose of the cap raise).

Good position to get to, and if both Martin and shareholders benefit from a buyback then that is a win win.

It would only be bad if a buyback was done at a price that was not in existing shareholders best interests but benefited the CEO massively due to his bonus structure.

I don’t see us being in that position for a long time!