Digital 9 Infrastructure Share Discussion Threads

[marlint111] 29/1/2024 09:03

Alan- I don't think this is correct. I'm not sure how the figures are presented- but this would correspond to a per share NAV decrease of around 10p- which simply is not in any of the reports- you can see the fair value movement on investments in there and they are nothing like that.

[alan pt] 29/1/2024 08:54

The Arqiva acquisition was £300M cash + £163M VLN (they said £159M in the initial announcement but that became £163M on close, 19/10/22)

The valuation in the end-June accounts was £345M, so that is a 25% loss in less than 9 months. Hard to see that as anything other than a bad deal

[marlint111] 29/1/2024 08:43

Donald- they clearly didn't see the risk of the big accretion payment- but now inflation is dropping amd the collar is in place there should start to be reliable cashflows coming out of arqiva. I'm not sure there was that mich wrong with the purchase tbh

[donald pond] 29/1/2024 08:36

The problem here all stems from Arqiva. I wonder if there might be a claim against the manager In negligence? Because it was a huge investment and they clearly had no understanding of the risks involved. It is hard to believe it happened without either incompetence or bad faith (on the part of buyer or seller or both). That's what insurance is for.

[gonsan] 29/1/2024 08:34

Finally, the only acceptable option. To end this mess and to try to realise the supposed NAV and return the money (I hope!).
It took them months to complete this “strategic review”, I could have done it for them in exchange for a pub lunch 4 months ago…

[williamcooper104] 29/1/2024 08:31

Yep - that's the most important bit IMO also Grabbed a few more at 27p on the open

[edho1911] 29/1/2024 08:08

why do the defer the sale of Arqiva, if they decided to wind down the trust?
I dont get it...

[tigerbythetail] 29/1/2024 08:06

As always, it all depends on timing.
Following that RNS, I make that this morning the shares are a most definite buy at a 70% discount to NAV.
On the other hand, long term investors have every right not to be happy.

[terminator101] 29/1/2024 07:44

How's that scenario about getting your cash back looking this morning as they bail out having spent all the cash?

[xxx] 29/1/2024 07:32

Hmmm, the only winner out of this is the advisors.
Yet another duff UK new issue...

[spectoacc] 29/1/2024 07:29

This'll be interesting too:

"The Board will release a trading update in the coming weeks, ahead of the publication of full year results for the year ended 31 December 2023.

As part of its reporting of the results for the year ended 31 December 2023, the Board has mandated an independent valuer to guide the Directors' assessment of the fair value of its assets under International Financial Reporting Standards, including the Verne Global potential earn-out payment of up to $135m."

[spectoacc] 29/1/2024 07:28

If they get us anywhere near NAV back, they'll be worth every penny.

[bagpuss67] 29/1/2024 07:23

Huge payday for M+A advisors.

[spectoacc] 29/1/2024 07:22

"Next steps for Arqiva

As part of the Strategic Review, various options for realising the stake in Arqiva have been considered on a preliminary basis by the Board. After careful consideration of Arqiva's business plans and current market conditions, the Board believes that the maximisation of the value of D9's stake in Arqiva is likely to take longer to realise than the other investments held by the Company. As such, while D9 will continue to consider and be open to all options for Arqiva which are value-accretive to shareholders, the Board has decided to defer a sale process for D9's stake in Arqiva for the time being. The Board will continue to explore various options including capital markets alternatives."

[spectoacc] 29/1/2024 07:05

Interesting RNS. Managed wind-down, surely the only sensible option, but with Arquiva to take an inderterminate time.

I think this is the most important thing in there:

"The Verne Global sale, announced on 27th November, 2023, is progressing towards completion with all required approvals expected to be received by the end of Q1 2024. The unconditional Finnish merger control clearance from the Finnish Competition and Consumer Authority has been received. All other completion workstreams, including those related to financing, are being advanced and on track within the expected timeline."

[rambutan2] 29/1/2024 03:04

Well, having watched since launch, I finally bought a few on thurs. I struggle to see a scenario where I won't, at a minimum, get my money back over the next 3yrs. And on the upside, 50%+ doesn't seem outrageous.

[spectoacc] 28/1/2024 19:12

Citywire's comment in their Z-scores weekly round-up:


"Digital 9 Infrastructure (DGI9) looks to be disappearing down the plug hole, this week’s 6.5% decline taking it down 72% over the past year to languish 77% below a net asset value apparently no one believes."


Lol. Time to buy?

[spectoacc] 28/1/2024 15:31

Ultimately it'll be pushing on a cork - don't underestimate the FTSE250 exit selling/overhang too.

But Verne has to complete (before the end of March) for DGI9 to start to consistently find buyers IMO.

[alan pt] 28/1/2024 15:25

@TigerBTT The managers have made many mistakes, over a long period and it seems that every announcement they make sends the price lower. At some point, even value focused investors start to see it as a perennially falling knife

Verne was the prize asset, so selling it at such a knockdown price means that there is a lack of confidence in the valuations of the other assets. If people don't believe the NAV, then they don't believe that it's actually a 75% discount

I (perhaps foolishly) still believe that there's value and upside here, but the bear case is easy to make

[salpara111] 28/1/2024 15:20

Arqiva, have the Northern contract with the Smart DCC (Data Communications Company)which is the company that manages the energy smart meter network infrastructure. I'm unclear of the reasons but there is no plan to migrate the system to using internet it is all done via wireless across the whole country.

[alan pt] 28/1/2024 15:16

The pressure to turn off terrestrial TV is so that the spectrum can be used for other purposes. Mostly (though not exclusively) those would also require transmission towers

Dig into Arqiva info and you'll already find other purposes and revenue streams, like the growing meter data business

Anyway, I think DGI9 will be dead and gone decades before you need to worry about the Arqiva transmission business!

[tigerbythetail] 28/1/2024 13:57

Big picture, DGI9 still puzzles me.
I get that the managers have made elementary mistakes - failing to match duration, failing to consider the rise in interest rates, and allowing the value of DGI9 to become completely detached from its NAV, thereby making an equity raise difficult.
I also get that a lot of institutional investors must be embarrassed to own such a poor performer, and that their own investment mandates may be forcing them to sell such a loser, and that selling may be begetting more selling.
I also get that simply selling off all the assets (even at a hefty discount) and returning, say, 75% of NAV to all shareholders is actually not all that simple to do. Things like the earn-ins and the need for regulatory approvals (let alone the volcano) complicate the picture. And, anyway, it's humiliating for the managers to adopt this course of action, and they may want to put off the ugly moment for as long as possible.
But I just don't get why DGI9 should be trading at more than 50% discount to NAV.
Surely this c. 75% discount is panic driven and way overdone?
Or am I missing something crucial?!?

[loglorry1] 28/1/2024 12:46

I'm hoping Maquarie did the math on this when they invested. Having said that you can imagine you could turn off 90% of the transmitters where there is internet very quickly.

I think the license is up for renewal soon.

What a mess DGI9 is. It does feel like we are missing something on valuation. It surely can't all be down to the risk of Verne happening.

[tigerbythetail] 28/1/2024 11:44

Hi Popit!
The answer would seem to be that terrestrial TV is set to end in 2034, when the current licence ends. There is a campaign to extend this to 2040+, chiefly on behalf of remote rural areas, but I don't know how much traction this has.
It's worth noting that only 15% of UK households are currently "internet only", so there is still plenty of demand for TV delivered via aerials.
I can't imagine how Arquiva could repurpose TV transmitters, so yes, this part of their business will sunset in time. But not all that soon!

[feddie] 28/1/2024 10:33

Can't read because of paywall but the spirit of the BBC is to reach everyone in the UK. There are people and places that will not have a reliable internet connection until something like Starlink becomes what ADSL or fibre are now. That feels like a long time.