SKT Sky Network Television Limited.

[jimdog31]

Broadband and the new SKyBox will eat up a lot of cashflow in the coming year. Both require large upfront costs for Sky, which are recouped over the long term by monthly customer installments. Both initiatives won’t be cashflow positive for a couple of years at least, especially if they are successfully growing like we want them too.

If sky got into mobile it could be even worse of a cashflow suck depending on the business model. They definitely don’t have the billions required to install a national network and obtain the necessary spectrums, so only way they could do it is by partnering with an existing network (Spark/VodaFone/2Degrees) - which means operating as a low margin reseller - either as an MVNO with its own sky branding, or more simply just bundling one of the networks mobile offerings and skimming a percentage (which probably is the best option).

Operating as a low margin reseller, when you already have a fixed cost base can actually be cashflow accretive... I think their secret sauce would be adding mobile AND power and being the one stop utility shop.

Theyve got a massive audience they can market these bundles too. And then they are a much more attractive acquisition target.

My issue is that this is the best way forward for SKY, but I just doubt we have the team to execute this. They cant even sell a property in the Middle of a hot market in Auckland?

Anyone else feel me on this?

[LaserEyeKiwi]

Operating as a low margin reseller, when you already have a fixed cost base can actually be cashflow accretive... I think their secret sauce would be adding mobile AND power and being the one stop utility shop.

Theyve got a massive audience they can market these bundles too. And then they are a much more attractive acquisition target.

My issue is that this is the best way forward for SKY, but I just doubt we have the team to execute this. They cant even sell a property in the Middle of a hot market in Auckland?

Anyone else feel me on this?

i agree the reseller/bundler is definitley the best approach for mobile. Would be open to them doing the same with power as well.

Actually your mention of its audience/customer base I think is one place they haven’t promoted at all well to investors. SkyBox customers i suspect are a rather high discretionary spending audience. It’s perhaps the only good thing as a result of the “cord-cutter” curse - the customers you do have left may well be described as on average wealthier as they don’t feel the need to “cut the cord” (cancel a high cost pay tv subscription) to save money.

The one mention in the investor day presentation is the slide below, which mentions “high income”. But it then goes on to talk about the need to diversify the audience in order to grow - when an alternate (and perhaps parallel) strategy not mentioned would be to massively milk the existing “high income” customer base for all you can with ancillary services. Now perhaps this is actually the underlying strategy (as broadband launch makes clear) but I get the impression they are a bit embarrassed to say it loud and proud that they have a rich customer base and are going to try and generate as much money as possible from them.

1FEA86AF-F8BE-4BBA-88A9-ADDEE6004FB0.jpg

[LaserEyeKiwi]

Just trying to think, aside from Mobile & Power, what other 3rd party services could sky bundle to rich not-that-tech-savvy customer base that they could skim a commission on?

Spitballing here, feel free to add your own ideas:

- Broadband obviously a key example, but also the new skybox which will enable an easier commission for 3rd party services (like the current disney+ deal)
- The already discussed Mobile & Power
- I’ll include the SkyGlass TV here for MistaTeas benefit, which fits with this strategy I now admit, but is a hefty upfront cashflow suck.
- data backup and virus protection as a broadband add-on
- Sports betting and/or fantasy sport competitions
- Insurance products
- Branded credit card with “Sky rewards”
- Domestic Travel bookings (“make sure your stay has SkyTV!”)
- a “buyers club” discounted deals
- ???

[mistaTea]

Broadband and the new SKyBox will eat up a lot of cashflow in the coming year. Both require large upfront costs for Sky, which are recouped over the long term by monthly customer installments.

Sure, but the bulk of that upfront cost has already been incurred and paid for. For Broadband there would have been a chunk of cash spent on upgrading their CRM system to onboard and maintain customer accounts. Integrate with Vocus NZ etc.

The costs of new staff to service broadband as well as sending out modems etc comes out of the margin. So the first year margin is non existent and then starts to pay its way after the first year probably (assuming we hold onto the customer).

The STB needs more spend, but a good chunk of the CAPEX spend on that has already happened.

And don't forget...with my projections I am working back from EBITDA and using the total CAPEX figures they have provided in their guidance.

So all of the spend on broadband and the new STB are taken into account with those numbers.

We should absolutely get a payout of $60M next year after they do a capital return or share buyback.

And with regards to Sky Mobile...nothing announced yet but I think it is a natural progression for Sky and is inevitable. Obviously we would not build our own mobile network - we would get a wholesale deal with Spark, Vodafone or 2D.

We probably only need around $15M for an initative like that to get the CRM tools etc ready to rock and roll for those customers.

They project a total spend of $25M for all growth initatives (of which Sky Mobile could be one of those initatives). I say negotiate reasonable lending terms with the banks and borrow that money.

Time to put the foot on the gas for things that are going to raise the market cap of Sky. That has to be a CR/buyback followed by a generous dividend policy.

[mistaTea]

Just trying to think, aside from Mobile & Power, what other 3rd party services could sky bundle to rich not-that-tech-savvy customer base that they could skim a commission on?

Spitballing here, feel free to add your own ideas:

- Broadband obviously a key example, but also the new skybox which will enable an easier commission for 3rd party services (like the current disney+ deal)
- The already discussed Mobile & Power
- I’ll include the SkyGlass TV here for MistaTeas benefit, which fits with this strategy I now admit, but is a hefty upfront cashflow suck.
- data backup and virus protection as a broadband add-on
- Sports betting and/or fantasy sport competitions
- Insurance products
- Branded credit card with “Sky rewards”
- Domestic Travel bookings (“make sure your stay has SkyTV!”)
- a “buyers club” discounted deals
- ???

Get wholesale deals with:

• NETFLIX
• AMAZON (Prime plus Kindle)
• YOUTUBE
• Spotify

That way we can offer the popular 3rd Party services for cheaper if they add them as part of a Sky bundle.

Sky's revenues (and then eventually bottom line earnings) could absolutely Sky rocket if they are successful in their plan to become the ultimate aggregator.

[jimdog31]

Get wholesale deals with:

• NETFLIX
• AMAZON (Prime plus Kindle)
• YOUTUBE
• Spotify

That way we can offer the popular 3rd Party services for cheaper if they add them as part of a Sky bundle.

Sky's revenues (and then eventually bottom line earnings) could absolutely Sky rocket if they are successful in their plan to become the ultimate aggregator.

AND, lets change the name?!!

Sky is dead.....

[mistaTea]

I am looking forward to my tax free capital return next year of $2/share ($50M property sale). I should get $78.5K.

Then in Feb distribute the first $30M of the $60M dividend. S/o will have been reduced to 150M...so that is 20c/share.

That will be another $47K for me before tax. I think they have a bunch of imputation credits they need to use, so my tax liability shouldn't be too bad.

So between now and March (divvy pay day), Sky should distribute $125.7K to me in total.

And then there will be a large capital appreciation to for my shares.

All they need to do is borrow a modest amount of money and execute the mistaTea plan and we can all get paid and move forward as happier shareholders.

Who's with me?!

[peat]

AND, lets change the name?!!

Sky is dead.....

Get rid of Work and Television

SKYNET

wot-blitz-untitled-terminator-sequel-t-1000-t1000-sixth-sense-terminator-3-rise-of-the-machines-.png

[Rustycage]

Get rid of Work and Television

SKYNET

wot-blitz-untitled-terminator-sequel-t-1000-t1000-sixth-sense-terminator-3-rise-of-the-machines-.png

APPROVE, as a SKT share/bagholder

[mistaTea]

https://www.nbr.co.nz/story/vodafone...fratil-s-boyes

This article is about Vodafone releasing capital by selling its mobile towers and moving to a shared infrastructure model...

Yet half the article talks about dividends.

That is what kiwis want. A steady stream of dividends...