Actually, my question goes more to the issue of how you value the currency going forward. As much of the T-mobile debt is held in dollars, I was wondering what your assumptions were moving forward regarding the possible valuation of the dollar. As much of the growth of DT is in the growth of T-Mobile US, what is it that will dominate, the devaluation of the US$ earnings or the reduced cost of debt service?
we're currently updating the model for FTE as we speak, especially after the recent drop. I will update you once we get the new intrinsic. The old intr. was at 30 euros for the ORD shares, but that might come down after the recent news. (probably not by much though). It appears that FTE offers good value as well, but it might be more risky than DT at current levels.
I am an analyst for a fairly large investment management firm, but am not in the telecom group. Therefore, I use the words we, since I use the models and reports written by a few of my co-workers (and since I agree with their valuation, I attribute the portion of the glory to me, lol). As to your question, the wireline business carries much lower margins than their cellular business and we also have it in declining revenue mode in our model. I can tell you that the T-Com segment (which includes the wireline business in Germany represents about 41% of the total DT enterprise value in the valuation, whereas the T-mobile segment represents 53% of the total value). You can see that the T-Mobile segment is what is actually driving a big chunk of the value for DT. On a personal note, in my opnion this is one of the safest investments you can currently make in the market. (Definitely the safest stock in my own PA!)If I were you I would feel very safe in this one for the long haul (it could go lower in the short term if the markets crap out, but it will eventually come back closer to its intrinsic).
Yes, I'm refering to the shrinking earnings from the wireline part of the business. This Shrinkage (I watch to much Sienfeld!)is in a high profit margin portion of their business. But I must admit I don't know what percentage of the total earnings it represents. You keep refering to a "we" when you offer an intrinsic value. We being who?
Based on what? I know for a fact that many institutional investors will be loading up on DT during this year. This current price is ridiculously low compared to its true intrinsic (around $40 for the ADR). This is a definitely a safe, undervalued investment.