Not one analyst agreed with my viewpoint about BT when it acquired it's 4G License for a paltry £200M compared to the significant premium paid by other operators near 4 to 5 fold more. In fact it was pooh-poohed on the basis it was break the terms etc...People got fixated with the 2.6GHz spectrum that is/was considered more "city friendly." What people did not realise it can be provided as a "Rural provision" and as such utilise VOIP. Now we have artciles coming out such as: BT turns attention to shaking up UK mobile market By Daniel Thomas. Well yes indeed but that was only 12 months+ ago it turned its attention to Mobile offerings...
So the main Quad Play at the moment is Virgin/ViVo with their quad play of Line Rental, Broadband, TV and Mobile offering. I've not read much coverage on this, but suffice to say, BT's will not be competition to 99% of Virgin's Quad Play customers on a simple basis of "Virgin will offer better Broadband Speeds". However, if BT can crack into the Mobile Market with an offering of £7 quid a month unlimited voice/texts & internet add on for Mobile utilising their and "another party's network."
Operator
|
Spectrum
|
EE ™ (Everything Everywhere another
wonderful IPO ensuing)
Also the Piggy Back for Virgin Mobile.
|
2 x 5 MHz of
800 MHz and
2 x 35 MHz of 2.6 GHz |
Three ™ (Hutchison 3G UK Ltd)
|
2 x 5 MHz of 800 MHz
|
BT ™ (BT Group) Niche
Spectrum Ventures Ltd
|
2 x 15 MHz of
2.6 GHz and
1 x 20 MHz of 2.6 GHz (unpaired) |
O2 ™ (Telefónica UK
Ltd)
|
2 x 10 MHz of
800 MHz
|
Vodafone ™
|
2 x 10 MHz of
800 MHz,
2 x 20 MHz of 2.6 GHz and 1 x 25 MHz of 2.6 GHz (unpaired) |
- Blyk
™; Family Mobile (IKEA); LycaMobile all use EE ™ (& O2 ™
(limited aspects)
- Vectone Mobile Virgin
Mobile; use EE ™ (old T-Mobile
& Orange branding)
- Giff
Gaff use O2 ™ & Tesco
Mobile both use O2 ™
- Abica
(& a small proportion of Three ™); ASDA Mobile BT Mobile use Vodafone
™ (but with Vodafone’s wins on spectrum the cost
advantages would be better served via O2’s network as they would bring
equal proportions to the Joint Venture); Lebara Mobile use Vodafone ™ & Talkmobile
(Carphone Warehouse) all use Vodafone ™
So ignoring what the spectrums do etc…lets focus on facts and what's missing from each offering.
BT will get back into offering mobile services, whether through an acquisition
or joint venture.
Vodafone and O2 are working together, under the company known
as Cornerstone Telecommunications Infrastructure Ltd. So a logical format is an
acquisition / joint venture with O2 (BT’s old spin-off), more than likely a
joint venture. An "all out" acquisition by BT, is unlikely as margins are hit etc…So why shoulder the burden when you can partner
instead?
Vodafone and Sky will work together, it’s not top-secret,
but the spectrum offers the opportunity to get involved in quad play and
improve retention/loyalty. After all Sky acquired O2’s landline offering not so
long ago. Logical format would be a like-for-like merger with O2, the synergies could be massive and could not be objected against under monopoly / merger rules. Purely on the basis it would improvement competitiveness in the market.
The reasoning behind this was solely on the bandwidth BT acquired and what others acquired. I do not see any reason why O2 would not bid for 2.6ghz spectrum if it had not already considered what BT was doing. In essence, with some savy bidding they've acquired a decent package when combined at a very decent price. The difference having been ignored , and now it's coming to the fore, you'll see the headlines that were very predictable in February 2013. Old news, but very relevant for trading...You get the idea?
Common-sense hitting the market again with BHP Billiton (BLT) spinning off the unloved assets. BHP Billiton mulls $20bn demerger & RNS on Speculation from BLT . I cannot see any case save for Nickel to invest in a demerged entity, it shall bode well for trading though. My view is they'll be flogging assets specific to acquirers in each section...They could always donate the South African ops to the Government to save on further issues (Sarcasm). The Four to Five pillars that are commented on are yes the prime for BLT, but it raises the question whom would want the rest, certainly not at a premium. Even the Chinese are realising one should offer less...well those copper traders throwing the 'stuff' out to cover margins and liquidate assets to repay debts.
Iron Ore still confusing the market with a significant run upwards. It would appear this confusion has again forced parties to rush back to their computer, look at the chart and site forecasts of a return to $120-$140/t. Yes that always happens with a surplus and 'growing' concern for China. I am reliably informed a lot of mills are finding the market very challenging and as such, I remain negative, albeit with limited positions as the price had consolidated. Iron Ore would have to test $120/t for a significant amount of days to establish the bullish trend eluded to by some "strangely" better qualified people.
Finally some positives for Premier Oil, Cairn & MOL, often missed but more important to gaining and idea of schedules...
Leggie, well regrettable but surely its becoming a theme...another target? ZincOx Resources plc Proposed fundraising through a conditional placing of £1m. Coincidental decline Leggie from February 2014?
Babcock continuing its theme with another contract award: Babcock International Group PLC Contract Award - London Fire Brigade Fleet Management.
The news on Weir Group is far from liked by the market, too much for Metso Oyj? I suspect so...
Atb Fraser
Fraser I caught your commentary nearly 14 months back. V.shrewd thoughts give me a buzz if you still have our number we can have a chat. Cheers kp
ReplyDeleteFraser
ReplyDeleteThx for the telecoms update- Im long BT (big surprise...) as I could see them making most of the right strategic moves over the last few years, getting their bread and butter business back to some growth after a decade of falling turnover and throwing a few grenades at their opponents, Sky being the main target there. Forcing them to overpay for content from now on will affect their ability to attack BTs core business aggressively over the coming years, despite the contents cost to BT- a shrewd move imo. It looks like the Murdoch bid premium is shoring up the BSY share price for now, but they have issues to solve.
Re Iron ore- yes, as usual it overshoots in both directions and needs to stabilise over the next few weeks. The panic selling seems over for now- the world isn't ending- but the issues with the bulk of Chinese steel mills running up big losses countered by the heavy number of jobs involved in this sector gives the Chinese planners plenty to consider too. They have made it clear that they see financial stability and employment growth as more important than the central 7% GDP adherence, which is sensible but has confused some of the commentators here.
Cheers. The Leggie
Leggie, the entire sector is ripe for consolidation and synergies. Sky/Vodafone or even talk talk if they get desperate...I was more amused that parties that pooh poohed it forgot to acknowledge me in being "fully" aware when it first happened, they were quick enough to attempt to slap down my theory.
ReplyDeleteIron Ore yes, is very hard to gauge from certain angles but in time it will represent true pricing. That was why I was laughing at the "value" being ascribed to the items BLT wants to divorce in favour of its Four/Five Pillars NOISE.
KP, I will endeavour to hook up in the next few weeks. A little birdie told me you're now "head". I bet none of them say it how I think it haha
You kept this site quiet Fraser. I have had a read through, fancy you trading the sell side of our buys on a number of stocks. Well done you & look forward to the call kp
ReplyDeleteFraser
ReplyDeleteRe BLT- yes, agree with your FTML comments- $19bn seems to be cocaine fuelled as that ragtag bunch of sundries wouldn't fetch more than $7bn in my books. Perhaps the analyst that plucked that figure out of the ether is the 5th pillock... :-))
I didn't know you followed/held JIL- a nice company, hefty 10% yield and one very big case reaching D Day this year, which could be off the charts so guess what... Yes- One of my longer longs. :-))
Cheers. The Leggie
Indeed Leggie, one fifth pillock :-)...
ReplyDeleteEMED is formally allowed to progress as of close this evening, it has my permission.
Fraser
ReplyDeleteRe EMED- that nice to know- the vendetta is over (until next unexpecting placing) :-)))
Have a great day- its out into the dangerous smog for me again.
Cheers. The Leggie
Morning!
ReplyDeleteWhat a stinking placing by ZOX! I'm guessing you mean theyre a shorting target rather than takeover Fraser!? I'm surprised its still above 10 today.
A hurdle jumped on emed, now to the next.
Have a great day all
Oli
Fraser as a 'Pooh Pooher' sometimes its not obvious until put it in a logical format. Admittedly you did at the time the difficulty for analysts is to be everywhere all the time. Great call early on, had we listened we would not have reduced well before. Why here and not the long room for this? Moorad and you are missed there. I am sure Bryce and Paul would welcome this as a table.
ReplyDeleteEvening Julian, no reason for not porting over to the Long Room, perhaps it would be advisable, but had this impression covering a trading perspective wasn't needed due to the make up of users. Perhaps I'm misguided...?
DeleteYes Moorad's board was good, I learnt a lot about FX, so much so my main trade is GBP Vs. AUD now. A chap i had a lot to thank for.
Re: BT, the analysis was obvious but ignored in my view. The significant will be shown over time, it's just a case of patience. Both Vodafone and Sky have to deal, the question is, with who?
Hope things are well with you! Atb Fraser
Julian-its a case of F not valuing his input IMO-consistently well above most analysts just not valuing himself - perhaps a thought provoker there F? Cheers Ianh
ReplyDeleteperhaps it is that IH, but it was you that promoted the joint board, whereby you decided to go and buy cameroon shortly afterwards. Call me sceptical! hahaha...
ReplyDeleteJulian my issue was the commentary given about my viewpoint, which was based purely on the logical format of things and not thinking too much difficulty. Sometimes the logical solution is the only solution. Vodafone and Sky (+Analysts) have clearly been caught sleeping with BT's action.
Atb Fraser