Cable & Wireless Share Discussion Threads

[loganair] 30/4/2012 10:15

The share price seems to be acting as though Vodafone will not even be able to delist CW. as they'll require 75% acceptances to do that.

I'm definately not happy to accept 38p per share that Vodafone are offering, we all know that CWW is worth far more, more like 50p per share.

[enormouswillie] 30/4/2012 09:26

What was it Steve Miller said ? Go on take the money and run...

[rogermauricesmith] 30/4/2012 08:41

Hi Pennypunter

I am not sure I agree with you on cashflow.

On Page 7 of the half year interim presentation it says "Trading cashflow up 19% to £38 million" as against £32 million in 2010/11. Admittedly its comparing the 1st half against the 1st half and not the previous half.

Also on Page 7 it declares the interim dividend whilst suspending future dividends. Not really the action of a company desperately short of cash.

On Page 11 the overall summary of actual cashflow (i.e. reality) it shows there is £1 million less cash than the last report. And this is because of an exceptional payment into the pension fund of £27 million.
Again making a voluntary payment into your pension fund of £27 million is not exactly the sign of a company that is short of cash. Rather the opposite I would have thought.

[fenners66] 30/4/2012 00:15

But since the board was silent about the potential takeover from the start and refused to put up any sort of public defence we can read into it that they were always in agreement.
As such when they sit down around the table they are hardly in a position to negotiate on behalf of their owners.
I do not expect to see anything in the published finals that will help support a higher valuation, the directors will not revalue the balance sheet and may look to reverse window dress, bring out all of the skeletons.....

What a contrast to the response to takeovers in the USA, where lawyers almost immediatley start class actions claiming the directors are selling off companies on the cheap.

A happy balance between the two approaches may be right....

[dickbush] 29/4/2012 23:19

Even after paying £100 mil into the pension fund and £40 mil on dividends, the net debt at year end should be substantially less than one times EBITDA. VOD is at 1.9 times; BT is at 1.6 times; AT&T is at 1.8 times. So, if the company needs to borrow to up its capex, there is plenty of room to do so.

This is not a rescue, it's a steal.

[pennypunter] 29/4/2012 22:40

MIATA - you are quoting from the finals over a year ago....see interim results cash has declined from £266m 31 March 2011 to £174m 30 Sept 2011. Free cash flow minus £17m - C&W is not generating cash- that's the main reason for the rescue.

[tonsil] 29/4/2012 19:14

basic arithmetic, ignoring the many other assets and value hidden in this business

what does it cost to lay a km/mile of cable across an ocean? i reckon there wouldnt be much change out of £10,000 given the cost of the cable , cost of ship and crew cost of technicians etc

500,000 x 10000 = approx five billion

CW. is a complete give away - much better for it to pair up with Colt

[miata] 29/4/2012 17:40

difference is Colt Tel generates cash- C&W does not

See 'Net increase in cash and cash equivalents' on page 64 of the annual accounts.

[tonsil] 29/4/2012 17:30

basic arithmetic, ignoring the many other assets and value hidden in this business

what does it cost to lay a km/mile of cable across an ocean? i reckon there wouldnt be much change out of £10,000 given the cost of the cable , cost of ship and crew cost of technicians etc

500,000 x 10000 = approx five billion

CW. is a complete give away - much better for it to pair up with Colt

[pennypunter] 29/4/2012 11:57

Tata have very little to offer any incumbent, their game is buying brand names and market share- works in a cheap bear market when businesses are easier to buy- but what happens post transaction when the co has to be run by telco specialists - no evidence they have much to add to an incumbent. Also a cheap buyer - I mean realistically C&W was never going to agree to 25p - rather pointless exercise unless they were looking for publicity. They got scared off.

Colt is a strong business that has learned its mistakes, overspending on network build out in UK and EU that had to be written down in the end. Yes going forward will be tougher now VOD is on the same turf. Maybe real story here is Colt is a target now for market share buyers. If Colt divest their cash, then market will have to re-rate them.

[dickbush] 29/4/2012 10:20

Colt is on an EV/EBITDA of 2.7 times, using the latest 12 months EBITDA and cash. The industry is, generally, on twice that. So there is no chance of them bidding using their equity. Fidelity "owned" companies don't buy "other people's problems", and it suits the bureaucracy round there to be in this position, IMO.

Also IMO, Colt are making a big mistake by not joining with Tata (using debt) because competing with Vodafone is likely to be a damned sight more difficult than CW. Sorting out CW. would be a mighty big problem but, equally, represents a mighty big, once in a lifetime, opportunity.

[pennypunter] 28/4/2012 14:53

Carlos Slim has a vast telco empire, but not in the UK, do not think synergies would be in the offing. Only person who could easily afford C&W and able to take in VOD, and already a competitor in EU markets.

[rogermauricesmith] 28/4/2012 14:37

Diku
Yes it was a great idea and I knew I had read it on the board. I only remembered it because there was comment about Colt on Bloomberg yesterday. But it would need bold leadership to execute. Don't know anything about Colt's current leadership.

But Colt is going nowhere. Even though it is much more highly rated than CW its valuation is still low compared to Level 3 and the likes. It need to do something. Merging with CW would solve all its problems and all of CW's management problems.

Pennypunter (good name)
Interesting that other telcos are frightened of Vodafone. I can see why they might be frightened of Vittorio Colao as he is rather a throwback to some other famous Italians (And I am choosing my words very carefully here. But as you mentioned Fidelity needs to find a solution for Colt, to unlock its value and Orbis must have done the same basic sums we have here.
Would Carlos Slim be interested? Does he have any synergies?

[pennypunter] 28/4/2012 13:46

Colt Tel is a very cautious outfit, last acquisition was basically had for free. Under pressure to divest its vast cash pile of around €300m - difference is Colt Tel generates cash- C&W does not. Colt is also majority owned by Fidelity Investments (over 50%) and are under pressure to pay a dividend- (Colt has not paid a dividend for over a decade), precisly because the majority owner does not want Colt overinvesting again on a big acquisition. Hence Colt will probably end up pretty soon having to pay dividends.

Cable arguably paid dividends they could not really afford that were imprudent anyway given the movement in the co performance.

Whilst I may hope for a Colt approach- I very much doubt it because Colt would not want to take on Vodafone- that's the main problem with this deal - it frightens away other people.

In my view there is only one person able to take on Vodafone, who might be interested in C&W and that is Carlos Slim.

[diku] 28/4/2012 11:40

Yes it was me who mentioned in the past of a possible Colt & CW. merger....

[makeaprofit] 28/4/2012 09:40

Remember. No paper certiicate no vote. If your shares are held in a nominated account ie with your trading account provider you have no vote!

[targatarga] 28/4/2012 08:00

Also it would be nice to know exactly where all the recently traded shares have gone. imho

[nigelmoat] 28/4/2012 07:47

Excellent proposal to put CW./Colt Telecom together Roger.
City Financial Institutions could be earning £millions in fees for your level of advice. Could that not be enough to get a deal underway? Bring it on!

[rogermauricesmith] 28/4/2012 03:38

Merger with Colt Telecom

One of the ideas that must have been tossed around the City is a merger between Colt Telecom and CW. I think the idea has been mentioned on this board recently.

Colt could execute a takeover by offering one of its shares for every CW share plus 20p in cash, a takeout price of around 57p.

That could be a very good deal for Colt indeed and create a £3.5 billion turnover company earning around £250 million a year in profits with a balance sheet value of £3 billion. Based on valuations for companies like Level 3 it could attract a very quick re-rating by the City of say £4 billion, making it a wealth-enhancing deal for both Colt and CW shareholders.

Note: Both companies have Orbis as a major shareholder.

[rogermauricesmith] 28/4/2012 02:40

Anyone any thoughts on the probability/possibility of a new bid first thing Monday? They reckon bids usually come on a Monday morning. If there is another bidder then there is a time risk in waiting and allowing Vodafone to consolidate its position.

[rockabilly.] 27/4/2012 19:22

There's a comment I'd love to make, but I'll sell my holding first...lol

[thehairydagger] 27/4/2012 14:57

logan, and a few brown suitcases of cash.