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5G and value update +2
08:27 15-Oct-19
While
we wait for something meaningful to come out of the Brexit push,
I'll take some time to update on the progress of telecom and 5G.
In general, the U.S. isn't getting all that much traction, as
Germany decides
to do its own case by case vetting. India, which will hold its 5G
auctions by March, is also in
talks with Huawei. There are some pockets
of resistance, but it looks like the only major markets where
Nokia, which has filed
its 2000th 5G patent, will have a protected inside track are
America, which begins its own auction on December 10th, and
Australia. Even so, I think NOK is at least slightly undervalued,
especially in advance of the imminent dividend.
In preparation for the 5G ramp, Vodafone continues to cut
employee costs in Germany
and Australia.
More important is the long-awaited capitulation
of Jio, in India, on its promotional pricing. This shows that
India's byzantine regulatory structures are a double-edged sword.
The same goes for EbixCash, which is not yet exposed to India problematic
banks, but could eventually
be part of the emerging solution
if it can integrate with India's UPI (unified payments
interface). To that end we will want to watch the value of the
PhonePe spin
off, as well as the clock. With the next VOD dividend just
over a month away, I'm holding shares of both VOD, as they
appreciate, and EBIX as they flounder.
We also got word from Resonant this morning about receiving
its first royalty prepayment for 4Q19 work to be done with
Murata. RESN has languished of late, and is now 15% below my
$3.35 minimum price target. This may be due in part to a short
piece on SA, which is right in saying that Resonant has
over-promised and under-delivered to date. However, volatility
like this is normal for thinly traded GRoDT stocks. I think the
company does have a technological edge and that it makes sense to
cautiously accumulate RESN at these levels.
Finally, I've also been putting a lot of time into investigating
yesterday's 6%+ drop in CVA. It's always possible that there's
some development I'm unaware of, but the move seems to be
primarily options-related short selling, which would make this a
minor buying opportunity, despite the unappealing macro
environment. Invest carefully!