SKT Sky Network Television Limited.

[Ogg]

After a 5.9 year 97.5% decline in share price, it amazes me that anyone could be optimistic about SKY.

You need to look at the other side of the coin.

You're paying just 2.5% of a business, which in reality hasn't changed much in 5.9 years.

The "6502 processor" that powered computers in 1975 is still being manufactured and sold today, 45 years later!

Satellite TV isn't going away anytime soon.

The capital structure of the company over the last 6 years was the main reason for the collapse.

Tomorrow the stock will reopen under a new capital structure. A fresh start.

The game plan is simple. Maintain the old, but high margin, satellite TV monopoly in NZ. While also, diversifying into new, but lower margin technologies. By bundling these two together there should be a sustainable long term business.

With a clean balance sheet and sufficient liquidity they will be able to fend off competition from Spark and Netflix.

Sky market cap at 17.5c is under $300m. Show me an investment less than that with more value?

[Ogg]

Would he belong to the Bowling Club by any chance?

Just lol... I've been here too long to get jokes like that.

[mistaTea]

The game plan is simple. Maintain the old, but high margin, satellite TV monopoly in NZ. While also, diversifying into new, but lower margin technologies. By bundling these two together there should be a sustainable long term business.

Agreed, and the revenue stream diversification will bring back optimism for the company over time. I believe this development will have Spark leadership concerned. Especially since they can't really complain like they did when Sky and Vodafone were going to merge.

Average Satellite customers pays ~$80/month. Since these are the customers that will first get the broadband offer...Sky could offer unlimited 100Mbs for, say, $70/month when bundled with the satellite sub.

In other words, the average satellite sub could end up with a Sky entertainment and fibre bundle for $150/month. That is a compelling offer that will help maintain the satellite margins while significantly staunching churn.

Then when Sky GO is standalone and they reach beyond the satellite base, it gets even cheaper since there is no MySky. Customers could have a fibre-Sky GO bundle from as little as $95/month to $170/month for 'the works'.

We have to see how well they execute the strategy of course, but I certainly haven't heard anyone try to argue that this is not the right way to go.

[winner69]

I'll be happy to take his entitlement as I'm going in at 120%.

Don’t blame you .... probably never get them cheaper ...and huge upside.

[Ogg]

That is a compelling offer that will help maintain the satellite margins while significantly staunching churn.

Yep, you could see mega bundles, like unlimited fiber connection + Sky mobile sim cards + lightbox + Sky sports.

Hardware updates could be next. New set top box with everything added in.

Do a few deals with Spotify, and a power company.

One bill for everything.

This is what the commerce commission was worried about. Seems like the only negative is lower prices for everyone.

[mistaTea]

Hardware updates could be next. New set top box with everything added in.

Not sure about that - Martin canned the Infinite Video platform project. I don't believe he is looking to kickstart that again. IV would have allowed customers to consume all content via satellite or streaming.

His plan seems to be finding ways to add more value to satellite customers without any big enhancements (and therefore significant CAPEX) to the set top boxes.

The investable $$$ goes to the new streaming platforms, given that is where the consumer demand is.

You are right that satellite will be around in a meaningful way for a while yet - but it is a sunset distribution model.

Also, if customers want a more modern STB that allows them to stream Sky bundles and more then Vodafone already have a good product for that. Sky could let VTV customers get cheap broadband too provided they subscribe to a Sky TV bundle.

[Baa_Baa]

Don’t blame you .... probably never get them cheaper ...and huge upside.

Hypothetically, at such low market cap, is SKY vulnerable to a takeover and what effect would that have on minority shareholders at such a low share price? Just asking.

It seems Spark might have an interest (broadband and multimedia streaming interests) and could write a cheque out for SKY, likewise Voda/IFT could as well (broadband and STB aggregation streaming). SKY's customer base must be an appealing target to acquire and diversify into either telco's products, twilighting the STB/Dish model and it's costs overheads.

Food for though or just a brain fart?

[mistaTea]

Hypothetically, at such low market cap, is SKY vulnerable to a takeover and what effect would that have on minority shareholders at such a low share price? Just asking.

It seems Spark might have an interest (broadband and multimedia streaming interests) and could write a cheque out for SKY, likewise Voda/IFT could as well (broadband and STB aggregation streaming). SKY's customer base must be an appealing target to acquire and diversify into either telco's products, twilighting the STB/Dish model and it's costs overheads.

Food for though or just a brain fart?

Note that Sky TV's market cap is likely to increase after this deal is done. Current Market Cap= $144M.

SP is probably going to trade @ 20 - 25c (judging by the sell/buy orders that have been put into ASB already). That would be equivalent to a market cap of $333M - $417M post capital raise.

So yes, a takeover is always still possible, but now a buyer would have to pony up more than before the capital raise. Not sure how Spark would get on given the performance and carry on when they complained about Voda-Sky.

And not sure Infratil would want to have a go, given Vodafone failed in 2016. The landscape has changed since then, and I reckon they could get a deal past the Comcom now...but they may be reluctant still.

But sure, a 'new Sky' on more solid footing could attract a buyer.

[winner69]

Note that Sky TV's market cap is likely to increase after this deal is done. Current Market Cap= $144M.

SP is probably going to trade @ 20 - 25c (judging by the sell/buy orders that have been put into ASB already). That would be equivalent to a market cap of $333M - $417M post capital raise.

So yes, a takeover is always still possible, but now a buyer would have to pony up more than before the capital raise. Not sure how Spark would get on given the performance and carry on when they complained about Voda-Sky.

And not sure Infratil would want to have a go, given Vodafone failed in 2016. The landscape has changed since then, and I reckon they could get a deal past the Comcom now...but they may be reluctant still.

But sure, a 'new Sky' on more solid footing could attract a buyer.

Those market cap numbers you mention ...So you saying have a big cap raise and the market rerated you big time.

[mistaTea]

Those market cap numbers you mention ...So you saying have a big cap raise and the market rerated you big time.

Well, we will have to see where the SP settles after the cap raise. It will probably bounce around for a while.

But it seems to me that the SP should settle around the 20c mark at least. That would give it a market cap of $300M or so.

And that is not really a big increase - it would pretty much just be equal to previous market cap + the new money that was injected.