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France T Message Board

  • craig1227@sbcglobal.net craig1227 Sep 28, 2012 5:04 PM Flag

    Share Price and Dividend Yield

    The dividend yield is very high for this company as a result of the decreased share price. Even when the dividend cut happens next year, the yield will sill be very good.
    However, the market does NOT realize this for some reason. At the very least with the expected dividend cut, the share price should be in the $17-$19 range and that is still undervalued. I dont understand the rational for this to be at $12, even with an expected divy cut and lower margins. They are generating tons of cash and continue to do so even with Iliad's Free mobile, which has not affected FTE customer base or margins that much.

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    • FTE remains the highest quality telecom in France. The issue here is the race to the bottom in pricing. The good news is that Iliad is hemorrhaging money and even with so many new subscribers, it is not making money. The French are interesting in that they own a large share of FTE, yet forced FTE to let Iliad use their network to increase competition. The double edge is that FTE is receiving billions in user fees, blunting the loss of customers.

      Over the long haul I see FTE as IBM in the late 1980s, underappreciated and with competition apparently from every side. They remain the ATT of France and are increasingly diversified with internet, telephone, wireless and programming.

      As for the dividend, the market has already priced in a significant reduction. Expect single digit dividends tracking cash flows, which is a much healthier metric. I applaud the company for making this announcement early, since retained earnings strengthen the balance sheet.

      Overall, the negative environment in Europe has the CAC stocks beaten down. But as always, with uncertainty comes opportunity . . .

      Sentiment: Buy

    • barron had interview with ceo and asked if dividends will be cut
      ceo said it might be cut to 40-45% of cash flow

      Sentiment: Hold

 

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