ASX Shares TPG / TLS share price jump

Telco share prices rally on back of TPG/Vodafone merger talks

Short term blip? Any commentary on the telecommunications market appreciated.

 

The simple way is just watch the sales volumes each day,between TLS and AMP are both in high turnover per day..

 

a bit of everything short got squeeze and optimism with 3 players less price war more profit
TPG has 5% short, about 40% free float, that translates to 12% odd of the free float short has to recovered, that is some serious squeeze, I post a while TPG is the picked of Telco post NBN

I sit on massive profit with TPG nearly 50%, it takes a bit of a break today I reckon as people takes profits but still a lot more shares has to be covered so it probably push closer to $8 and beyond.

TLS got a boost too because with three players they less likely facing TPG price war onslaught.

Squeeze still happening $9 here we come

 

This has been a long time coming, and would have happened back in late 2014/early 2015 when Vocus acquired Amcom if the ACCC didn't advise that the telco acquisition trend needed to stop (pause) for a bit. In the meantime they've already been in partnership - with Vodafone heavily funding TPGs fibre optic roll out, and TPG supplying tower connectivity for Vodafone.

Cheers,
Inertia.

 

It's all talk at the moment, who knows if the merger will happen??? I'm up 51% and thinking I'll sell out later today just in case. Buy back in at a later date.

 

It not about the valuation any more, it about short squeeze

 

I can see a lot of technical difficulties from a property perspective - Vodafone shares many of its telco sites with Optus under a Joint Venture or sub-licence. Vodafone uses one of TPG's entities for its fibre backbone, Optus uses Optus fibre (in most cases). Building owners aren't going to be happy with one less carrier after being mooted that TPG will be a 5G carrier (already owns the spectrum) but if it merges with Vodafone, there won't be as big a call for additional sites unless the Vodafone sites are unsuitable or cannot be further sublet without conflict.

 

I don't get this, regardless of how many players squeeze for profit will always be there, won't it?

 

You don't know about short squeeze? market 101

basically, all business has shorters and long-term investor, shorter think the company prospect is **** so they borrow shares and sell on open market hoping they can buy back later cheaper and return those share and they profit the differences.
These guys don't own shares and have no legal right to it, they borrowed from the rightful owner

People who lend them shares make interest on the lending.

a short squeeze happens when merger and take over occurs and shorter need to buy back shares to return to their owner and they all scramble to do so before the shares keep going up.

the people who hold shares don't want to sell so now the demand and supply reverse, you have so many buyers and no seller the price has gone to the moon, and if you want to buy you have to pay juicy premium as the holder know u in the **** and you just have to pay up, shorter has to pay back the shares one way or another they legally has to even if it cost them 10 times or 100x times that the way the market work

so last few days shorter been scrambling to buy back shares as TPG has 5% short (roughly 40m shares) and only 40m free float so it works about 12% of the company they need to buy back... NASTY stuff when you get short squeeze.

That why short has UNLIMITED risk, you can lose a lot a lot of money if thing goes wrong.

I short too but I usually picked a business that can never be merge or take over that why I never get squeeze, part of my risk management

 

Interesting. So it's currently over 8 now, do you see it going to 9 and beyond?

 

It can depend on it pans out In next 2 weeks only 7m odds shares change hand since yesterday and outstanding short is 40m shares so another 30m or so shares need to be purchase on market and return.

Not sure if you understand what free float mean it basically tpg has 800m shares but 60% of that is locked up by the founders and large holder and they usually don’t trades those shares on the market

So what left is 40% trades on the market You and I and the rest trades on that 40% that is free float

So a 5% short of this company is 40m shares but they can only have access to buy and sell on 40% float so the actually number is higher

as 5% of 40m free float is around 12% of the company So that is serious tangle they got themselves into.

Also depend on whether the merger can go aheasd if not then the pressure will be less and shorters don’t need to buy back in and shares may tricky back to valuation but if a merger is going ahead you look at 10 bucks plus from here

So all fun and games and risk and reward take
Profit when you are comfortable

That why I said it all about short squeeze now
Valuation takes second sitting to this event
I also witness this scary event a decade ago and in the thick of it

Short sellers make VW the world's priciest firm

 

Was about to sell half my holdings and TPM dropped 50 cents.

 

Could see it coming to be honest, if you go over my threads you'll see I openly stated that telco sector is the one to buy in atm as it was getting oversold in my opinion and people overreacted. I bought a crapload of TLS @$2.75, will buy more if it drops to under $3 again, for now I'm happy to sit and watch.

 

I initially bought TPG in 2013 at around $2.57 on a market cap of around $2 billion.

I held until 2017 and when I sold I had in my investment thesis that Vodafone's mobile subscribers would end up on TPG's mobile network some way or another.

What made me get out of TPG is the high capex of building many small cells for mobile. Combine that with a price war with Telstra/Optus and it looks like a race to the bottom.

However, I'd never bet against Teoh. He is like a grand chess master who's always been several steps ahead of the market. I may not have thought through his mobile strategy enough - seems like he may bring a new model to Australia similar to a company India.

 

The moves made by Teoh are quite remarkable:

- acquires pipe network for submarine cable and dark fibre to put it on a similar playing field as Telstra and Optus with data transmission costs

- acquires iiNet on 10x cash flow with a further several years of costs to be stripped out after. Gives the size and cash to bid for mobile spectrum and handle the debt

- stitches Vodafone up with dark fibre which is essential for mobile, essentially forcing Vodadone to marry TPG whether they like it or not - they've been paying for TPG to build dark fibre, now they need TPG to survive

Genius

 

Merger with Vodafone on the cards. Big jump in TPM price. Time to offload?

 

Yeah out 9.40 easy money 50% plus for 6 months work
Still have another telco VOC at 2.35 so up 30% but not done yet still more room to run

 

Nice. From memory SOL started buying as the price slid down from 7 to 6 about a year and a bit ago.

Happy enough to benefit from their holdings.

 

No SOL has been a long time TPG Strategic investor, they are always backing the founder Teoh
what every Teoh does they support it, they have very good working relationship.

They raised capital at $5.25 a share a year ago to buy the Mobile spectrum, Teoh out lay 200m of his own money and SOL do the same for their entitlement.

I got in when it trades below the 5.25, cheaper than what they outlay when the market was very depressed about telco

 

been holding tpg for a over a year now.. time to sell seriously $10 -$11 possible ? or not worth the risk ?