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Vodafone Group Plc Message Board

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  • xuyang11 xuyang11 Nov 20, 2012 10:10 PM Flag

    VOD shares are the best deal

    $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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