SKT Sky Network Television Limited.

[LaserEyeKiwi]

If management do surprise us with a divvy (and there really is absolutely no reason to expect one right now, given they have not said they are planning any kind of capital return...)

But if they did...well, we expect there to be ~$100M of cash in the bank as of June 30.

They could pay $70M in divvy (4c/share) and still have $30M kicking around.

If they did a buyback with that $70M instead they could buy back 437.5M shares at the current SP. The SP would go up if they started buying back but I reckon they could still grab 400M (about 23% of the shares outstanding).

If there is no takeover, and if they are not going to buy any of the assets that are for sale *cough* Vocus! *cough*... then what is left for them to do?

It would seem unconscionable for The Board to sit on $100M of shareholder funds if they aren't going to deploy it in a meaningful way - especially given the business is only 'worth' $280M right now.

I am not predicting a buyback or divvy now (as I say, the board has not given us any reason to expect one from the comments they have made).

But I am very interested to know what they will do with the funds.

And of course, the property sale...that has gone awfully quiet which probably does not bode well...but if a sale is still done, that could further bolster cash reserves by $20M maybe.

FY21 FCF is projected to be $70M based in the ID presso. So even if they return $70M now, by June 2022 they could be sitting on as much as $120M.

And ​zero debt!

Wait - didn’t they say dividend will be reassessed in FY22? (which we are already in right now).

“The Board currently intends to reinvest available free cash flow during the remainder of FY21, and will re-evaluate the commencement of dividends after that”

[mistaTea]

Wait - didn’t they say dividend will be reassessed in FY22? (which we are already in right now).

“The Board currently intends to reinvest available free cash flow during the remainder of FY21, and will re-evaluate the commencement of dividends after that”

Yeah reassessed…didn’t sound like a commitment - even though they know they are flush with cash.

I am still hopeful that a deal can be done and Vocus can be purchased for a reasonable price. As time goes on it seems less likely.

Divvy would be a last resort.

We will know one way or the other soon!

Fun to chat about it and speculate on the possibilities until then.

[uravgtrader]

https://m.imgur.com/lrxwFQW

[nztx]

$100m cash in the bank!



Jesus Christ, you and Peter are both delusional when it comes to Sky's cash generation ability! No way is it going to have that much free cash flow.

Look, here's the situation bro, Sky's problem is the amount of expenses and capital that's required to run the business!

Media companies are like SaaS companies, there's a fixed amount of cost but every additional customer that comes on board is almost 100% profit once the bills have been paid!

Operating a media company in a small country like NZ is inefficient. That's why TV3 went under, and that's also why a takeover by an American conglomerate of Sky is almost assured to happen. This is the trend globally!

The good news is that Sky has great top line revenue and no debt. This means that equity holders should be rewarded with a decent pay out should a cash offer come forward.

The reason why there's no talk of a divy or buyback right now is because Sky is weighing up all the options. There's a lot on the table. Buying Vocus is an option but it's a risky option. Becoming a full fledged telco and competing with two large established players in a small market is not a smart move. At the very least this will required further capital investment and existing shareholders will be diluted out of any potential gains. Not to mention waiting a very long time for returns.

The best way forward is to leverage Sky's own strengths, which is it's satellite customers who pay a large monthly fee for what is mainly low cost repackaged content with the odd high cost sporting event. Sky needs to consolidate with a large market capitalized company that has access to global credit at a discounted rate. It then needs to merge into the Australian market (Foxtel) and form an NZ/AUS division. That's what Discovery/Warner is doing. The Chair understands all this bro. This is what's happening behinds the scenes. Doing divys and buybacks is just wasting time here.

The bottom line, is that the DEAL IS HAPPENING THIS MONTH. AUGUST IS DEAL MONTH. AUGUST IS WHEN OSB DEAL HAPPENED. AUGUSTS IS WHEN RUGBYPASS HAPPENED. AUGUST IS DEAL MONTH. IT WOULD HAVE HAPPENED LAST AUGUST BUT COVID HIT!

I added 100k shares today. I'll be buying more every time it goes down! I will also be dumping all my stock on the 25th if there's no deal! Clock is ticking! No bull**** slide 80 talk either! Has to be legit deal or I'm out and never posting here again!!

Havent you posted the same intentions to sell & leave on here about a month or so ago - Ogg ?

I seems to remember your posting before the SKY CEO had her Investor Day session

it must be quite a few pages back by now ..

maybe you just forgot you already posted it .. ?


https://m.imgur.com/lrxwFQW

[mistaTea]

$100m cash in the bank!

Well, yeah…it’s just math isn’t it?

Earnings near top end guidance. Back of the envelope numbers:

$187.5 EBITDA - $32M lease costs - $50M CAPEX - $22.5M tax… should leave around $80M wouldn’t it? FCF will be a similar number.

They already had about $20M left over after paying the bonds back. So you add the two numbers together ‘bro’ and you get $100M (or thereabouts). If tax was higher than I allowed for maybe it’s $95M.

They haven’t bought anything, so why wouldn’t the cash balance have grown significantly?

And if there is a large pile of cash…they have to explain what they are going to do with it.

Your takeover talk is just hilarious. Funny that you think Comcast is coming to save your bacon. And you are buying even more shares! I expect your behaviour to become even more erratic this month as you increase your holding and struggle with the psychological pressure.

Nobody is buying sky - it would have happened a long time ago. But nobody is prepared to pay what the board expects - for that we should be thankful to our board. For not giving sky away.

Their best bet long term is a deal with Vocus I think. Sky have to diversify revenue streams and telco services complement their core offering. The Business Case is not complex!

But Vocus need to come down in price. Sky won’t do a $700M deal for Vocus.

[LaserEyeKiwi]

Well, yeah…it’s just math isn’t it?

Earnings near top end guidance. Back of the envelope numbers:

$187.5 EBITDA - $32M lease costs - $50M CAPEX - $22.5M tax… should leave around $80M wouldn’t it? FCF will be a similar number.

They already had about $20M left over after paying the bonds back. So you add the two numbers together ‘bro’ and you get $100M (or thereabouts). If tax was higher than I allowed for maybe it’s $95M.

They haven’t bought anything, so why wouldn’t the cash balance have grown significantly?

And if there is a large pile of cash…they have to explain what they are going to do with it.

Your takeover talk is just hilarious. Funny that you think Comcast is coming to save your bacon. And you are buying even more shares! I expect your behaviour to become even more erratic this month as you increase your holding and struggle with the psychological pressure.

Nobody is buying sky - it would have happened a long time ago. But nobody is prepared to pay what the board expects - for that we should be thankful to our board. For not giving sky away.

Their best bet long term is a deal with Vocus I think. Sky have to diversify revenue streams and redo services complement their core offering. The Business Case is not complex!

But Vocus need to come down in price. Sky won’t do a $700M deal for Vocus.

If FCF was anywhere near what you are suggesting then Sky would be in the middle of a bidding war by multiple private equity firms.

But sky themselves guided to “low levels” of free cash flow going forward on investor day, so I think the likelihood of significant free cashflow anywhere near the level you are suggesting is unlikely.

Remember Sky is forecasting a big decrease in both EBITDA & net income for the 2nd half of the year, possibly a loss.

1st half figures:
EBITDA: $116.3 million
Net income: $39.6 million

Full year guidance:
EBITDA: $170-$182.5 million
Net income: $37.5-$45 million

Implied 2nd half earnings:
EBITDA: $53.7 - $66.2 million
Net income: -$2.1 million to +$5.4million

(I remain a bit confused in the discrepancy between EBITDA and net profit given the guided capex spend, unless it telegraphs a big “D&A” event)

Also remember they said EBITDA will “reset” in FY22 to a lower level absent the one off positive impacts present in FY21, and also due to the “new normal” cost structure.

[mistaTea]

If FCF was anywhere near what you are suggesting then Sky would be in the middle of a bidding war by multiple private equity firms.

But sky themselves guided to “low levels” of free cash flow on investor day, so I think the likelihood of significant free cashflow anywhere near the level you are suggesting is unlikely.

Remember Sky is forecasting a big decrease in both EBITDA & net income for the 2nd half of the year, possibly a loss.

1st half figures:
EBITDA: $116.3 million
Net income: $39.6 million

Full year guidance:
EBITDA: $170-$182.5 million
Net income: $37.5-$45 million

Implied 2nd half earnings:
EBITDA: $53.7 - $66.2 million
Net income: -$2.1 million to +$5.4million

Also remember they said EBIDTA will “reset” in FY22 to a lower level absent the one off positive impacts present in FY21, and also due to the “new normal” cost structure.

Their projections for lower FCF is for future financial years.

FY21 has been and gone (along with all the cash generated).

Go back to my previous post and look again at the calculation I did.

If you think about it a bit more I think you will agree with me - because you are smart and I am right.

[LaserEyeKiwi]

Their projections for lower FCF is for future financial years.

FY21 has been and gone (along with all the cash generated).

Go back to my previous post and look again at the calculation I did.

If you think about it a bit more I think you will agree with me - because you are smart and I am right.

How do you account for guidance of -$2.1 million to +$5.4 million net income in 2H, while at the same time adding $80 million in cash, purely from operations. Not saying that isn’t impossible, but it requires an explanation about how that can be realistically achieved.

EDIT: wait I think your error is that you are using full year EBITDA for the 6 month period. Or are we talking past each other - are you talking about June 30 2021 or June 30 2022?

[mistaTea]

How do you account for guidance of -$2.1 million to +$5.4 million net income in 2H, while at the same time adding $80 million in cash, purely from operations. It saying that isn’t impossible, but it requires an explanation about how that can be realistically achieved.

Don’t look at profit. Sky’s profit bears no resemblance to FCF because they have a large depreciation charge that bears no resemblance to actual CAPEX spend.

You have to start with EBITDA and work backwards.

[mistaTea]

How do you account for guidance of -$2.1 million to +$5.4 million net income in 2H, while at the same time adding $80 million in cash, purely from operations. Not saying that isn’t impossible, but it requires an explanation about how that can be realistically achieved.

EDIT: wait I think your error is that you are using full year EBITDA for the 6 month period. Or are we talking past each other - are you talking about June 30 2021 or June 30 2022?

I am using full year data for FY21 (ending June 30th just gone). Why would I use any other figures.

There is no ‘error’. The FY results are what you need to use to work out how much excess cash was earned between 01 July 2020 and 30 June 2021.

Whether the bulk of that cash was generated in H1 or H2 is irrelevant.