Vodafone Group PLC (VOD)

The trouble he has with many of the telcos is that it is hard to find the growth. They pay a nice dividend and it looks safe, but if you can’t grow your company, there might be a disruptor coming along, and all of a sudden, they can’t pay the dividend anymore. He has avoided the sector. There are better places to put money.

Orange (ORAN-N) or Vodafone (VOD-Q)? Europe is very important to them, they are also putting a whole lot of money into India right now. Telenor just exited India, so that is opening some space. There is huge competition in India, and very little money to be made. Debt levels will rise again when 5G spectrum is purchased. The dividend payout is still sitting at around 100%. When he sees a company increase dividends by 1%-2%, it is not an indication of a strong franchise. If you want to be in the European market, because GDP is growing there, Orange would be the pick. If you are a long-term investor and believe in the long term play of India, then then you go with this one.

Retail and global investors have misunderstood that this company is a British company, and think that a lot of their income is coming out of the UK. Their biggest market is actually Germany. Spain is a huge market. The rest of Europe is a huge market. The euro zone, for the 1^st time in about 15 years, 2 years ago started allowing the regions to grow revenues, so all the telcos in Europe are growing revenues. Because of that, the risk is not as great as it is perceived. The dividend is reasonably safe. They just did a joint venture with a firm in India, which is going to be interesting. The valuation is attractive and the dividend is safe. 3.76% dividend yield.

There is hope for the value to go up. It is a very competitive industry. They are spending money on spectrum. They pay a decent dividend. It is not a bad place to be if you are looking for yield (5.9%). It is one of the better telecom companies in Europe.

A decent yield. It has been pretty uninspiring over the last 5 years. They are no longer losing subscribers. You have some growth and perhaps India exposure turns around.

Like many European telecoms, this is in huge competition. High marketing platforms, a lot of low margin business coming on. Until they get to 5G there probably won’t be a lot of takeaways for any telecoms in that area. Yield is 5.8% and will probably stay there, but you have to understand that revenues are not growing, they are declining. It is a saturated market.

We are moving towards a UK-based telecommunications company, and a world where we are looking at higher rates. Thinks we could see a surprise rate increase in March, from the federal reserve. If we get that, even though this is a UK company, it is going to be very hard in a rising rate environment for some of these to do well. He worries that your capital might be 10% less even though you are getting a decent dividend.

Thinks people are confusing this as being a British company. In reality, it earns only about 2% of its operating cash flows out of the UK. Its biggest market is actually Germany, and the 2^nd biggest market are the other parts of Europe. It also has a big Asia/Pacific and African presence. Great dividend. It has been crushed because the market didn’t appreciate exactly what the underlying risk is. An interesting company. 6% dividend.

Telecommunication stocks have sold off as interest plays. High dividend yielders, so people use them as proxies for interest. The prospects for some of these companies is brighter. There is less regulation, and it is an unloved sector right now. Potentially this could have a nice rebound in 2017.

The problem with all the European telcos is the revenue growth. There is so much competition going on, that they are having to compete on price and can’t get their organic growth in play. Revenue growth last year was -3%, assets are not growing, and the operating margins are 3%, way lower than all the other European telcos. Doesn’t feel that they are a good allocator of capital right now

In 2014, they sold their Verizon stake back to them for over $130 billion, and gave their shareholders a one-time special dividend. They’ve repaired their balance sheet and have gone out and done some acquisitions in the media and content space. Talking about doing deals at Liberty Media. The stock has been under a lot of pressure post the BREXIT vote. The pound has fallen to the $ which has been a headwind for the stock. With a 6.5% dividend yield, it is really attractive.

When looking at European telcos, there are other names he would prefer. This is the 800-pound gorilla in Europe. European economic growth has been lacklustre. They are going to have a hard time managing churn and driving average revenue per user higher. Dividend yield of 6%+.

A very interesting story. All the telcos are selling off. This particular company has been hit by the fears of BREXIT as well as by the fact that telcos are selling off. He thinks this has been oversold. Only 15% of earnings come out of the UK. There is political noise in Britain regards to the exit, but ultimately whenever there is a confluence of political crisis, currency and downside valuation, often if you step in you will be well rewarded.

It has not done anything. They got a lot of money from the Verizon deal. It is the problem with a lot of European telecoms. There are too many players and they are not allowed to consolidate. People saw what happened to Time Warner an AT&T and think Liberty International would look to buy this one and it would make sense. That is the only story behind this one. It pays a nice dividend but you won’t see the growth out if it that you want. He would not hold on to the stock, though.

Over 30% of revenues come from emerging markets. There is some growth through 3G penetration. Within Europe, it actually got new subscribers for the 1^st time in 6 years. Upgraded the network, so that it is much better and faster. A major player in Germany, Italy and Spain, as well as the UK. Dividend yield of around 5%.