Cable & Wireless Share Discussion Threads

[cathian] 01/5/2012 11:51

djwr100 - You could be quite right I believe. On the face of it, there appears to be no urgency to sell CWW to Vodaphone but it's very difficult to assess without all the relevant information to hand. I always thought that the appointment of Gavin Darby as Chief Executive was for him to refocus the business and make the assets really work for the benefit of the long-suffering shareholders. He was well incentivised with a share option on 2,000,000 shares and should be given sufficient time to complete the task for which he was employed. All this rubbish in the Announcement about the offer price reflecting a substantial premium simply demonstrates how little respect there is for the intelligence of the shareholders. Those with even a short term memory will remember that the share price was over 50p in May last year and subsequently fell to about 10p following substantial write-offs and the suspension of dividend payments by the Board. This, in turn,seemed to precipitate selling by Income Funds. In any event, the Accounts had apparently been cleaned up, or so it appeared to me at least, but still there appeared to be a net asset value in excess of the current offer price.. For the Chairman to suggest that part of the attraction of the offer was to enable shareholders to avoid "exposure to the risks inevitably presented by executing a medium term improvement strategy" overlooks the fact that some improvements have already taken place and just doesn't add up when only about six months previously the Board had taken on Gavin Darby-formerly of Vodaphone-as Chief Executive, for exactly that role i.e to carry out a medium term improvement strategy from which the shareholders would benefit He was clearly not appointed,so far as I'm aware, as a stop gap measure so why does the Board now seem so anxious to hand over CWW to Vodphone prematurely and at what appears to me to be such a low price. Hopefully, our Board will clarify matters and explain in the Offer document what has caused this apparent volte face. Has something occured since the last trading update about which we are all unaware?

[diku] 01/5/2012 11:30

Anybody think shareholders here ought to make the new CEO work for his money....if the VOD bid goes through then he his walking away with easy money.....

[jacks13] 01/5/2012 10:32

Does anyone have any current information on the percentage of acceptances of the Vodaphone offer?

[rburtn] 01/5/2012 08:53

Nothing that I can see has changed since the heady days of the split - themselves a mere shadow of the company that was. As a long term holder, we have been seriously misled by its management over many many years. Whether it amounts to fraudulent misrepresentation or not does not depend upon the p.i. but others with much the same skeletons in their cupboards so we shall never know. On thing is quite sure, the dividend record carries a significant message, either it was never justified and was intended to deceive, or the business is in better shape than the offer implies. Someone has questions to answer and they ought to be in a court of law.

[dickbush] 01/5/2012 08:51

CW. and its predecessor has gone from one set of awful management to the next over decades. There is nothing wrong with the CW. business or the long term prospects for the industry.

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.

CW.'s EBITDA Margin is ridiculously low, probably about 17% when the results are in (assuming Darby hasn't thrown the kitchen sink at the second half). BT and AT&T are circa 27% with VOD at 31.5%. OK, so they are the big boys. But even COLT, a much smaller company,and thinly streached throughout Europe, is over 21% (over 22% without the acquisition of MarketPrizm). A good quality management should be able to achieve a mid-20's EBITDA Margin from such a geographically concentrated cost and revenue base. That's a prospective £500 mil plus of EBITDA down the road, substantial free cash flow and dividends to shareholders.

VOD has talked the CW. BoD into allowing its acquisition at a knock down price. You can come to your own conclusions w.r.t. Gavin Darby's motives. But the bottom line is that Vodafone has not been asked to pay one penny for the benefits that accrue to it. Instead, CW.'s BoD has bought the argument that, without a bid, the shares will go back to 20p-or less. So by taking 38p they are doing shareholders a big favour.

If, as I'm sure they will, Vodafone make full use of the accumulated UK tax losses, they will, in fact, have got the company for free, as well. After they've upped the capital spend, paid for redundancies and for finally putting Cable & Wireless UK, Energis and THUS together, and sold off the unwanted parts of the business, this is going to rank as one of the greatest corporate acquisitions in UK history-for VOD. Look out for the crowing in Vodafone's Report and Accounts for 2012.

[djwr100] 01/5/2012 08:36

There is no reason for this 'asset' to be up for sale. Just because someone makes a low offer doesn't mean that it must be sold.

It simply has to be managed properly.

What has changed since the split, which was done to increase shareholder value?

[7kiwi] 01/5/2012 08:24

RMS,

RE: 4909. Gross Margin is not profit. Total gross margin for the half year was ~£511m, but operating profit was ~£50m. So, if the overheads are allocated along the lines of gross margin, then the £70m of gross margin in the global carrier business would equate to about £7m of profit. Double that up for the full year and you get £350m of sales and £14m of profit. Put the profit on a p/e of 10 (generous) and you get £140m (tops) - i.e. nowhere near £500-700m.

Re: 4911. Your optimistic scenario came up with £1.2bn for shareholders; but they are actually getting over £1bn. Not too far away from each other. The fact remains that no other bidder has emerged to pay more than VOD have offered. Any asset is worth what someone is prepared to pay.

[Edit: and trading cashflow at the half year was £38m, but after pension funding and finance costs free cashflow was -£17m. In the second half year, there is a further £100m outflow for pension contributions to come, so quite how you can suggest the business is generating cash at an annual rate of £120-130m is beyond me. And even that free cashflow figure is before dividend payments, and there's another divi payment to come in the 2nd half].

And if they stopped spending on capex the business would collapse. They wouldn't be able to take on new business, nor maintain the network and customers would leave in droves.

[rogermauricesmith] 01/5/2012 08:09

Hi Ninja 19

We are not complaining - just observing a situation that is clearly unusual in the way it is playing out.

[ninja 19] 01/5/2012 07:42

what you people are complaining how many bought when the company were going down the cesspit?


There were only a few here, now suddenly all the experts are out.

[thehairydagger] 01/5/2012 07:32

Very very fishy.

[djwr100] 01/5/2012 07:04

So, what are the directors playing at, and why are big shareholders not doing something about it?

[pennypunter] 30/4/2012 23:17

C&W is not generating cash as the decline in the cash balance shows - it has significant pension fund liabilities - the board agreed to pay £100m in the second half. The board have gone into this deal because the co's profitability has gone, it is in need of a rescue, that was what the shares were saying before VOD came along.

[forwood] 30/4/2012 18:15

Can almost guarantee there'll be some positive action in this before the game is played out, whether based on fact or rumour. At the moment we've got a 6.6% discount on the offer on a possible 6 month view to completion. Risk reward ratio looks good to me so I'm back in from today's lows.

[loganair] 30/4/2012 16:09

djwr100 - CWW CEO is an ex-Vodafone director due to make several £100,000's from the shares he purchased at 15p less than 1 month before Vodafone showed interest and the shares in CWW shot up and once CWW taken-over by Vodafone will receive 1 years salary as per his contract.

[djwr100] 30/4/2012 15:06

What's to stop the management fixing the company, if that's what it needs?

Have they given up?

[jimrclark] 30/4/2012 14:05

I've missed the last week or so due to being out of the country. From what I can gather, no timetable has been set for the takeover, ORBIS are refusing to budge and Vod are putting the squeeze on ORBIS by letting the share price drift.

Has there been any statement from Tata? I thought that they reserved the right to make a bid once Vod had made their bid.

I thought that this was a done deal but it appears not... maybe there's life in this old dog yet.

[boix] 30/4/2012 13:53

Vod will let this drip lower until Oct? - bid lapses mid Nov.
Probably bottom out about c.24p?
Then it's up to Orbis? - take 38p or we go sub 15p?
Vod can not increase their bid, Vod will not buy without 100% ownership and Orbis won't sell at 38p!
See you in Oct.

[mikestamp] 30/4/2012 11:36

What happens next ? and when ?

[loganair] 30/4/2012 10:30

So why is the share price not bouncing around or just under the 38p mark. We can all pile in at 35.6p and sell to Vodafone for 38p for a good profit???

[dickbush] 30/4/2012 10:24

fenner, neither do I expect to see anything in the final results to support a higher valuation. The BoD has recommended the offer already. So they are more likely to have thrown the kitchen sink at the second half to justify that decision, AND have nothing good to say about the company's outlook. Makes you wonder why Darby took the job, doesn't it?

[cyan] 30/4/2012 10:18

We have to be realistic now. If there was to be a third party approach we would have heard by now. I still would like to know the truth of TATA's withdrawl; just how much were they indicating. Can not see them bouncing back into the fray. Time to accept the take over me thinks.