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Vodafone Group Public Limited Company Message Board

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  • nexon78 nexon78 Nov 20, 2012 2:12 PM Flag

    VOD shares are the best deal

    I've been looking for a valuation of VZW but get different ranges. It would be interesting to see what happens if VOD decides to sell it.

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    • $6.5B net income from VZW is based on the fact that past half year VOD share of VZW pretax income is 3.197B pound, equivalent to $5.08B or roughly $10B the whole year. The tax rate is about 35%, which leaves $6.5B as net income.

      On the growth side, smart phone penetration in VZW customer base is just above 50% and is growing at about 2% quarterly. Plus, VZW net add was about 1.8M last quarter. The result was VZW grew its net income by 20%+ last quarter. From VOD side, its share of pretax income from VZW last year was $7.9B and this year will be above $10B. This kind of growth rate warrants 15x multiple, in my opinion.

      That's how I derived $100B price tag for VOD's share of VZW, and I feel it's conservative as I prefer to leave some room for error.

      Sentiment: Strong Buy

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