petec Posted November 16, 2018 Share Posted November 16, 2018 As expected, CTL declared quarterly dividend: 0,54$ per share will be paid on 7th Dec Thats 2,16$ per year = 11,3% divi rate p.a. on the share price of 19,07 $ (yesterday) All as expected and announced from the management. Since 2 years we saw sensless debates about "how safe is the divi", although payout ratio went massivly down from high 70th to mid 50th now and although all the time management was totally committed to the divi. Out of interest why are you so focussed on the dividend? The dividend bears no relation to the intrinsic value of the company and if it is too high relative to long term sustainable cash flow then it represents a material threat to equity holders. The fact that they insist on paying it might indicate confidence, or it might indicate stupidity. The equity value in 5 years' time might well be far higher with a lower dividend and lower debt than it is with a higher dividend and higher debt. And you need to own it for 9 years to make your investment back in dividends, so if equity value is meaningfully impaired in 5 you're done for. The payout ratio has not gone into the 50's on a sustainable basis: they were very clear on the call that it's in the low 70's excluding one offs, so there hasn't been a lot of progress on that front. THX Petec for comments. The management is not only commited to the dividend. They said clearly during all last conference calls: They will increase EBITDA, EBITDA margins and FCF....(from year to year & over the next few years !!!) and they will eliminate unprofitable revenue and they will reduce debt. All of this happened till now. I have no reason to doubt. It is more likely that they know what they are doing and predicting and its more unlikly they do a fraud to us investors by telling lies. We will get next guidance for whole 2019 already in app 3 moth. Than we know more about FCF in 2019 and payout ratio. For today i am happy we are in the mid 50th. Even if you bought CTL on the high price levels, two years ago - after the aqcuisition was announced - around 25 $ ... you dont have a big loss today, cause you got already 2 times 2,16$ dividend. Not talking about the scenario, if you invested when the price was down mid 13$ in Nov 2017. Or in other words from 9 years, 2 years are already done. I'm not worried about fraud. I'm worried they fail to pay down enough debt and then (in several years) find they can't sustain ebitda. They have been very clear that capex will rise again and that they are not at a 50's payout on a sustainable basis. Don't kid yourself that they are. Yes, if they do something extraordinary with costs and ebitda next year they might get there, but it is a stretch, and I wouldn't count those chickens before they hatch. Link to comment Share on other sites More sharing options...
Valuehalla Posted November 16, 2018 Share Posted November 16, 2018 I agree on your view, that there is a risk. But its small in my opinion, thats why i am positiv. Investment is always connected with risks. CTLs huge fiber footprint is needed and someone will pay for the use. We will not see it going in chapter 11 Link to comment Share on other sites More sharing options...
petec Posted November 16, 2018 Share Posted November 16, 2018 CTLs huge fiber footprint is needed and someone will pay for the use. We will not see it going in chapter 11 Someone will certainly need to pay. Whether they need to pay enough to support an EV of $60bn is another thing. But I remain long, for now, and I hope you are right. Link to comment Share on other sites More sharing options...
Guest longinvestor Posted November 16, 2018 Share Posted November 16, 2018 CTLs huge fiber footprint is needed and someone will pay for the use. We will not see it going in chapter 11 Someone will certainly need to pay. Whether they need to pay enough to support an EV of $60bn is another thing. But I remain long, for now, and I hope you are right. CTL is sitting on the best fiber assets. Comcast inked a DF deal with LVLT in 2005 for 20 years (I believe); Too bad for us shareholders that it was a giveaway. But we will see how the marketplace is when that that comes up for reneg. It is only 6 years from now (sigh!). Comcast Business nationwide rides on that DF. Keeping a seat at the table in a fully consolidated telecom world is key. Getting paid a (fat)dividend to wait for that is a big deal for long termers like myself. Link to comment Share on other sites More sharing options...
petec Posted November 20, 2018 Share Posted November 20, 2018 Atilla Tinic leaves to become CIO at Dish. Link to comment Share on other sites More sharing options...
matts Posted November 20, 2018 Share Posted November 20, 2018 Atilla Tinic leaves to become CIO at Dish. more than one senior person leaving in quick succession is starting to concern me. Is Storey not paying his people market rate comp? Do they think prospects for their stock options are not that great? Link to comment Share on other sites More sharing options...
walkie518 Posted November 20, 2018 Share Posted November 20, 2018 Atilla Tinic leaves to become CIO at Dish. Tinic was with tw telecom, which L3 acquired in 2014...this could simply be rationalization of c-suite? Link to comment Share on other sites More sharing options...
Valuehalla Posted December 5, 2018 Share Posted December 5, 2018 CenturyLink, Inc. (CTL) UBS 46th Annual Global Media & Communication Brokers Conference (Transcript) https://seekingalpha.com/article/4226330-centurylink-inc-ctl-ubs-46th-annual-global-media-and-communication-brokers-conference?dr=1 Quote CFO Neel Dev concerning the divi: So we're comfortable with the payout ratio. So if you look at our payout ratio this year it was in the mid-50s and we did have some one-time benefits this year from lower capital spending from tax refunds. We net off making a $500 million contribution to the pension fund. So if you look at all that and normalize our payout ratios, we’re in the low 70s any reasonable expectations for us for the next few years you still see very good dividend coverage. So we’re comfortable with the payout ratio. Link to comment Share on other sites More sharing options...
Jurgis Posted December 24, 2018 Share Posted December 24, 2018 CTL bonds might be attractive again with ~8% yields to maturity. Link to comment Share on other sites More sharing options...
walkie518 Posted December 27, 2018 Share Posted December 27, 2018 CTL bonds might be attractive again with ~8% yields to maturity. The stock might be more attractive on a risk/reward? Link to comment Share on other sites More sharing options...
petec Posted January 11, 2019 Share Posted January 11, 2019 My high-level notes from a recent conference interview with Jeff Storey. - Demand growing structurally - bandwidth and the number of locations needing it, from datacentres to IOT to incremental points of consumption. - Enterprise customer networks are also getting complex so they need help in managed services for complexity, security, etc. CTL are one of the best at building and operating networks. "We have visibility into networks that virtually nobody else has." - Have ubiquitous network in USA especially but also EMEA, Latam, Asia-Pac. - Manage everything to FCFPS. Understand why market looks at revenue, but they don't manage for it. - Moving from integration synergies to structural cost reduction. Have $13-14bn in costs (so a 10% reduction in costs is a c.40% boost to FCF). E.g. take 40-50m calls a year and they're not calling to say well done. Aim to cut that by 75% - happier customer, lower cost. Means getting bills right and providing online problem diagnostics etc. Then more in head count, real estate etc. Conference poll: 15% like the dividend; 28% say cut the divi and raise capex; 13% say cut the divi and buy back shares; 45% say cut the divi and repay debt. Response: we have repaid $2.7bn in LT obligations since the merger. Very serious about getting ND/EBITDA to the low end of the 3-4x range. Link to comment Share on other sites More sharing options...
Valuehalla Posted January 12, 2019 Share Posted January 12, 2019 Hi Petec, thx for your post. Webcast is available on ir of ctl webpage. All sounds positiv to me Link to comment Share on other sites More sharing options...
walkie518 Posted January 17, 2019 Share Posted January 17, 2019 anyone have a sense for the drop today? Link to comment Share on other sites More sharing options...
gfp Posted January 17, 2019 Share Posted January 17, 2019 Is this a Singapore entity filing notice to sell a bunch of stock? https://www.sec.gov/Archives/edgar/data/18926/000119312519010510/d659309d144.htm anyone have a sense for the drop today? Link to comment Share on other sites More sharing options...
walkie518 Posted January 17, 2019 Share Posted January 17, 2019 Is this a Singapore entity filing notice to sell a bunch of stock? https://www.sec.gov/Archives/edgar/data/18926/000119312519010510/d659309d144.htm anyone have a sense for the drop today? hmm...I think this is a sub of Temasek, which prev held a $2.6B position in CTL as of last reported quarter interesting that they didn't file as Temasek, maybe that's coming later CTL's price is pretty low here so not sure if discretion was the aim as much as exiting the stock filings shows yesterday as approx date of sale...maybe they filed yesterday and they're dumping today? anyone know anything specific about Temasek and/or why they would need to dump so much CTL? Maybe they prefer BABA and have gotten a margin call? Link to comment Share on other sites More sharing options...
gfp Posted January 17, 2019 Share Posted January 17, 2019 I doubt a sovereign wealth fund is selling because they have to or because of a margin call elsewhere in their portfolio. They presumably want to sell. I didn't follow the situation, but is it possible that the shares were restricted until just recently? It is a 144 filing after all. Link to comment Share on other sites More sharing options...
walkie518 Posted January 17, 2019 Share Posted January 17, 2019 I doubt a sovereign wealth fund is selling because they have to or because of a margin call elsewhere in their portfolio. They presumably want to sell. I didn't follow the situation, but is it possible that the shares were restricted until just recently? It is a 144 filing after all. Temasek is a weird beast...not typical sovereign wealth fund That said, you're likely correct that the sale has more to do with portfolio positioning away from the US. From the 2018 Temasek media conference: Turning to the United States, growth has been strong, but risks are building. We anticipate GDP growth to continue above trend this year, reflecting tax cuts and increased government spending. Private consumption has also been resilient and labour market improvements are providing additional support. We expect the Federal Reserve will continue tightening monetary policy. However, with the economy running above capacity and a fiscal boost in the late stage of this economic cycle, the risk of overheating has increased. Against this backdrop, we are pacing our investments, and focused on our intrinsic value-based approach. Link to comment Share on other sites More sharing options...
Valuehalla Posted January 20, 2019 Share Posted January 20, 2019 Temasek Holdings position in CTL shares is spreaded to different subsidiaries Temasek Holdings owns 100 % of Tembusu Capital and 100% of Temasek Capital Tembusu Caital owns 100 % of Bartley Investment, which owns 100 % of Elligton Investments and 100% of Everitt Investments Temasek Capital owns 100 % of Seletar Investments, which owns 100% of Aranda Investments Temasek Holdings holds shares of CTL: 8,7 % reported before 27th March 2018 9,7 % reported on 27th March 2018 11,0 % reported on 4th April 2018 9,9 % reported on 16th January 2019 http://ir.centurylink.com/Cache/396409096.pdf As it looks to me, they sold tbe shares app to the same prices now, as they paid to increased their position in 2018. Link to comment Share on other sites More sharing options...
LightWhale Posted January 21, 2019 Share Posted January 21, 2019 Interesting that Corvex, who were the most bullish on CTL post-merger, sold out. Anyone knows why? Link to comment Share on other sites More sharing options...
kab60 Posted January 24, 2019 Share Posted January 24, 2019 Conference poll: 15% like the dividend; 28% say cut the divi and raise capex; 13% say cut the divi and buy back shares; 45% say cut the divi and repay debt. Response: we have repaid $2.7bn in LT obligations since the merger. Very serious about getting ND/EBITDA to the low end of the 3-4x range. Since it seems like a lot of posters here somewhat base their thesis on the dividend being sustained, I'd say this should get your attention. 73 percent wants them to cut the divy and either retire debt or invest in the business. Divy/no divy doesn't change the value of the company, but I'd be surprised if management didn't take notice of the markets' signals. Obviously, the market might have it totally wrong, we'll see. Perhaps it pops if they cut the dividend? Link to comment Share on other sites More sharing options...
Valuehalla Posted January 24, 2019 Share Posted January 24, 2019 There was the same poll, with similar results a year ago. The new CFO confirmed the divi for the next few years. No signal from the management to cut the divi. Debt is reduced all the time... additionally to the divi. Link to comment Share on other sites More sharing options...
Valuehalla Posted January 24, 2019 Share Posted January 24, 2019 Corvex: I think they are still on board, by holding Calls. Does anybody know how to get information about that? Link to comment Share on other sites More sharing options...
walkie518 Posted January 24, 2019 Share Posted January 24, 2019 Corvex: I think they are still on board, by holding Calls. Does anybody know how to get information about that? looks like Corvex sold out they could have sold the stock in full and bought calls...provided that the underlying shares of those contracts are less than 5% of the company, there would be no requirement to file except for the 13F I'm a little surprised but there could be other factors at play...moreover, corvex doesn't have a history of being a long-term holder...if you look at their portfolio as of last 13F, you'll see that the vast majority of stocks were bought in 2017 and 2018 Link to comment Share on other sites More sharing options...
gfp Posted January 24, 2019 Share Posted January 24, 2019 Yeah, Covex's call options on CTL were disclosed on the 13F when they held them. I think they expired worthless two separate times. It's possible that the final call options on 7.5million underlying shares were sold and didn't expire completely worthless but either way they don't have a position in CTL anymore. Link to comment Share on other sites More sharing options...
petec Posted January 24, 2019 Share Posted January 24, 2019 Conference poll: 15% like the dividend; 28% say cut the divi and raise capex; 13% say cut the divi and buy back shares; 45% say cut the divi and repay debt. Response: we have repaid $2.7bn in LT obligations since the merger. Very serious about getting ND/EBITDA to the low end of the 3-4x range. Since it seems like a lot of posters here somewhat base their thesis on the dividend being sustained, I'd say this should get your attention. 73 percent wants them to cut the divy and either retire debt or invest in the business. Divy/no divy doesn't change the value of the company, but I'd be surprised if management didn't take notice of the markets' signals. Obviously, the market might have it totally wrong, we'll see. Perhaps it pops if they cut the dividend? I wish they would. The divi clearly is not valued by the market and elevates risk (due to higher debt) if anything goes wrong with the FCF story. It's the one thing I really question about this management team. Link to comment Share on other sites More sharing options...
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