Proactiveinvestors United Kingdom Vodafone Proactiveinvestors United Kingdom Vodafone RSS feed en Wed, 12 Dec 2018 19:31:42 +0000 Genera CMS (Proactiveinvestors) (Proactiveinvestors) <![CDATA[News - Vodafone, Sony Pictures employing new Spider-Man movie to promote digital-jobs finder ]]> Vodafone PLC (LON:VOD) and Sony Pictures (NYSE:SNE) said Friday they are using the upcoming release of a new Spider-Man movie to promote a platform that helps young people find digital jobs.

The “gamified” Future Jobs Finder aids people in identifying their skills and interests through a series of short tests. Vodafone launched the smartphone-based platform in March, and Sony is teaming up with the FTSE 100 mobile-services provider to promote it with the December release of “Spider-Man: Into the Spider-Verse”.

After users complete the tests, they receive a summary of their skills and interests that can be used on their CV or a job application, the companies said.

"Our ambition is to help 10 million young people to access digital skills, learning and employment opportunities and our partnership with Sony Pictures will help us accelerate our progress towards this goal,” said Joakim Reiter, director of external affairs at Vodafone Group in a statement.

The series of tests that power the site were developed with psychologists, careers experts and training providers. More than 300,000 people have used Vodafone’s free platform since March, introducing them to more than a million digital-job types.

The collaboration is aimed at young people in 20 countries, with Vodafone setting the goal to steer 10 million people toward job access by 2022.

Andre Seddoh, Sony’s vice president of international marketing partnerships, said: "We are so excited about this visually ground-breaking movie, as for the first time we open up a different Spider-Man universe - known as the Spider-Verse - where more than one can wear the mask.”

Fri, 30 Nov 2018 07:38:00 +0000
<![CDATA[News - Vodafone slumps to first-half loss but shares jump as it maintains dividend ]]> Vodafone PLC (LON:VOD) slumped to a half-year loss after taking a hit related to the merger of its India business with Idea Cellular but shares gained as it maintained its dividend and upgraded its cash flow forecast.

The telecoms firm posted a loss of €7.8bn for the six months to September 30, compared to a profit of €1.2bn a year ago.

The group completed the merger of its India operators with Idea Cellular in August in a bid to strengthen its position in the nation’s competitive mobile market. Vodafone recognised a €3.4bn loss and an impairment charge of €300mln on the combined business, which has been named Vodafone Idea, in the first half. 

Foreign exchange headwinds, the company’s exit from Qatar and the adoption of IFRS accounting measures also dragged on results with revenue falling 5.5% to €21.8bn.

Organic service revenue edges higher

Organic service revenue rose 0.8%, driven by a strong performance in its European consumer fixed business, good demand for mobile data, an increase in customer numbers in emerging market operations and growth in the corporate services unit.

However, Vodafone said it had to contend with heightened competitive pressures in Italy and Spain along with a lower wholesale revenue.

READ: Vodafone ticks up as Italian arm snaps up spectrum for €2.4bn to develop 5G coverage

Adjusted earnings (EBITDA) rose 2.9% on an organic basis, excluding items, to €7.1bn as the company reduced operating expenses as part of a restructuring to simplify the business. The adjusted organic EBITDA margin rose by 0.3 percentage points to 30.8%.

On a reported basis, however, adjusted EBITDA declined 4.2% due to the impact of unfavourable exchange rates, a decrease in handset financing in the UK and a regulatory settlement in the UK.

Free cash flow. pre-spectrum, fell 30.6% to €894mln as a result of lower adjusted EBITDA and higher capital creditor outflows.

Net debt increased by 6.4% to €32.1bn, due to dividend payments and spectrum purchases to deploy 5G mobile technology.

The interim dividend was left unchanged at 4.84 cents and the group said it expects the full year payout to be in line with 2018. This announcement sent shares up 8.8% to 157p in morning trading as there were concerns the dividend could be cut given the reported losses and tough trading conditions in various regions this year. 

Vodafone raises free cash flow forecast

For the 2019 financial year, the company expects adjusted EBITDA organic growth of 3% - the mid-point of its previous guidance of 1-5%. It also lifted its free cash flow pre-spectrum forecast to €5.4bn from at least €5.2bn previously.

“Looking ahead, my new strategic priorities focus on driving greater consistency of commercial execution, accelerating digital transformation, radically simplifying our operating model and generating better returns from our infrastructure assets,” said chief executive Nick Read.

“Our goal is to deepen customer engagement through a broader offering of products and services, and to deliver the best digital customer experience, supported by consistent investment in our leading Gigabit networks. We expect that this will drive revenue growth, reduce churn and lower our European net operating expenses by at least €1.2bn  by fiscal year 2021.”

AJ Bell investment director Russ Mould said: “The reason why the share price is up today is upgraded guidance for free cash flow, being the amount of money it generates from operations minus the bit it needs for capital expenditure. Essentially it is the pot of money that is used to pay back debt and pay the dividend."

Tue, 13 Nov 2018 07:59:00 +0000
<![CDATA[News - Vodafone has target price cut by JP Morgan Cazenove amid dividend and growth concerns ]]> FTSE 100 mobile firm Vodafone Group PLC (LON:VOD) has had its target price cut by JP Morgan Cazenove to 240p from 255p amid concerns over the sustainability of its dividend and growth outlook.

In a note to clients, analysts at the US investment bank said in contrast to 2017 when Vodafone hit multi-year highs, this year it had suffered a “dramatic de-rating” as scrutiny around the core pillars of the business questioned its credibility.

READ: Vodafone has price target cut by UBS on Italy costs and UK earnings concerns

The bank added that they believed the company’s fortunes now rested on its ability to cut costs rather than in top-line growth.

Reducing spending was “key” to supporting deleveraging, improving dividend cover, and restoring operational confidence, analysts said, adding that a deal in May to buy continental European assets from Liberty Global and the purchase of spectrum by its Italian unit in October had helped stretch the net-debt to EBITDA ratio to 3.8x, intensifying concerns of capital structure and dividends.

READ: Vodafone ticks up as Italian arm snaps up spectrum for €2.4bn to develop 5G coverage

JP Morgan Cazenove also said that asset sales could help alleviate the risks associated with the high debt ratio, suggesting non-core European units as potential targets as well as Australian, New Zealand, and Indian assets.

Lastly, the bank suggested that, in the absence of the above options, it would argue for a dividend cut as the structural benefits would “far outweigh” the headline risk.

“A cut is not a necessity. That said, it remains a sensible alternative if other measures to support rapid deleveraging fail” analysts said, adding that a 35% reduction would support 0.4x of additional leverage reduction four years out.

The bank also retained its ‘Overweight’ rating on the stock, mainly on the back of a foreign exchange tailwind forecasting a revenues/EBITDA rise of 2% per annum.

In late-morning trading Wednesday, Vodafone shares were up 0.5% at 147p.

Wed, 07 Nov 2018 11:00:00 +0000
<![CDATA[News - Vodafone has price target cut by UBS on Italy costs and UK earnings concerns ]]> Vodafone Group PLC (LON:VOD) has had its target price cut by UBS ahead of its first-half results in November.

The Swiss investment bank trimmed its target price for the telecoms group to 230p from 250p due to the expected impact of higher costs at its Italian business and the prospect of weaker earnings in the UK as well as a lower valuation for the VodafoneZiggo joint venture.

READ: Vodafone ticks up as Italian arm snaps up spectrum for €2.4bn to develop 5G coverage

“Italy is being impacted by the entry of Iliad into the mobile market and the group is being further impacted by handset financing drag in the UK - accounting treatment means revenues are reclassified from service revenues into equipment revenues,” UBS analysts said in a note to clients.

"However, we think second quarter results will show that the broader group remains resilient and that underlying estimates should remain underpinned,” they added.

The bank expects the FTSE 100 telecoms firm do deliver second-quarter organic service revenue growth of -0.6% (+0.3% in Q1) with organic earnings (EBITDA) growth of +1.6% in the first half.

It also expects Vodafone to re-iterate its guidance of 1-5% organic earnings growth for 2019 – UBS assumes 2.0% compared to a previous forecast of 2.5%.

Shares in Vodafone were 1.2% up at 145.70p in mid-morning trade.

Mon, 29 Oct 2018 10:51:00 +0000
<![CDATA[News - Vodafone ticks up as Italian arm snaps up spectrum for €2.4bn to develop 5G coverage ]]> Shares in Vodafone Group PLC (LON:VOD) moved up in early trading Wednesday as its Italian unit purchased spectrum that would enable it to deploy 5G mobile technology.

The FTSE 100 telecoms firm said the spectrum, purchased for €2.4bn in an auction held by the Italian Ministry of Economic Development, included ranges of 3700 megahertz to 80 MHz, 700 MHz to 2x 10 MHz, and 26 gigahertz to 200 MHz.

READ: Credit Suisse downgrades Vodafone Group target but stays positive on longer term view

Vodafone said the 3700 MHz spectrum would be immediately available to enhance coverage, improve capacity, and rapidly develop 5G services, while the 700 MHz would be available from 2022 to enhance 5G and provide “nationwide coverage at very high speed and very low latency for next-generation applications”.

The 26 GHz, meanwhile, would be used from January 2019 to deliver high capacity services to densely populated locations such as city centres, sports stadiums or industrial plants.

The company added that it was leading 5G trials in Milan and expected to achieve 80% coverage of the city by December.

Shares were up 1.3% at 162p.

Wed, 03 Oct 2018 08:51:00 +0100
<![CDATA[News - Credit Suisse downgrades Vodafone Group target but stays positive on longer term view ]]> Credit Suisse has downgraded its targets for Vodafone Group PLC (LON:VOD), citing recent foreign exchange changes and commentary from a management presentation, leading to lower forecasts for headline earnings and free cash flow.

The target reduces by 10p per share, to 225p, nonetheless, the Swiss bank retains a positive ‘outperform’ rating.

READ: Vodafone divi “at risk” but still worth a punt, says Citi

Analysts noted that some near-term challenges remain for Vodafone – namely softer growth in the second quarter, uncertainties around the Liberty deal closing, and balance sheet pressure – but, they believe that 2019 should see better trading.

“Taking a slightly longer-term view we expect the outlook for the stock to improve and see the recent weakness as providing a more attractive entry point,” the analysts said.

“We see this recovery as driven by 1) service revenue growth inflecting and returning to modest growth in FY19 (CSe); 2) Digitization and synergy realisation to drive margin expansion (> 1pp margin expansion p.a. in FY19-20); 3) improving visibility on spectrum costs (no negative auction surprises so far) and peak leverage.”

Ahead of half-yearly results due in November, the Credit Suisse analysts said they believe a reiteration of guidance would be positive for the telecom share price, even if the service revenue is slowing.

Mon, 17 Sep 2018 13:08:00 +0100
<![CDATA[News - Vodafone divi “at risk” but still worth a punt, says Citi ]]> Vodafone PLC’s (LON:VOD) dividend is at risk of being cut, according to Citi analysts, but they still reckon the telecoms giant is worth a punt.

The FTSE 100 group has seen almost a third wiped from its value since the turn of the year, largely due to concerns over increased competition in some of its overseas markets – Italy, Spain and India, to be precise.

READ: Vodafone completes merger of India business

Citi number cruncher Georgios Ierodiaconou acknowledges these issues but argues that Vodafone’s “strengths should not be ignored”.

“Germany is a good and we believe improving market; Vod UK should show good growth. Smaller markets are on balance performing well,” wrote the analyst in a note to clients.

He adds that the dividend, in his opinion, is at risk of being chopped, but only if the company “is forced by the market” to do so.

Ierodiaconou concludes: “Worth a trade – upgrade to ‘buy’ — we see upside risk for VOD shares in the near term unless the credit markets not just deteriorate but do so meaningfully.”

Shares climbed almost 2% on Thursday morning to 166p.

Thu, 06 Sep 2018 10:19:00 +0100
<![CDATA[News - Vodafone completes merger of India business with Idea Cellular ]]> Vodafone PLC (LON:VOD) has completed the merger of its India business with Idea Cellular to create the largest telecoms operator in the nation.

The company announced the deal in March in a bid to strengthen its position in India’s competitive mobile market.

READ: Vodafone Australia and TPG agree A$15bn merger to take on Optus and Telstra

The combined business will be renamed Vodafone Idea Ltd and will remain listed in India.

Aditya Birla Group, the majority shareholder of Idea Cellular, is to buy a 4.8% stake in Vodafone Idea from Vodafone for INR26bn (£281mln). Following completion of the deal, Vodafone will own a 45.2% stake in Vodafone Idea and Aditya Birla will own a 26.0% stake.

Former Vodafone India chief operation officer Balesh Sharma has been appointed the chief executive of the merged business.

In the year to June 30, Vodafone India and Idea generated revenue of INR585bn (£6.3bn) and earnings (EBITDA) of INR107bn (£1.2bn).

Vodafone said the merged company is expected to deliver INR140bn (£1.5bn) in run-rate cost and capex synergies.

READ: Vodafone shares drop as it posts slowdown in first quarter organic service revenue

The news comes a day after Vodafone said its Australian business and local rival TPGTelecom Limited have agreed to merge into a single A$15bn telecommunications company that will be able to better compete with Telstra and Optus.

Fierce competition in some of its markets, including a price war in India, led to a slowdown in first-quarter organic service revenue.

Fri, 31 Aug 2018 08:44:00 +0100
<![CDATA[News - Vodafone Australia and TPG agree A$15bn merger to take on Optus and Telstra ]]> Vodafone Group PLC's (LON:VOD) Australian business and local rival TPG Telecom Limited have agreed to merge into a single A$15bn telecommunications company in a bid to strengthen their position in a competitive market. 

The combination of Vodafone Hutchison Australia Pty Limited (VHA) – Australia’s third largest mobile operator – and TPG will have about 20% of the nation’s mobile phone market and 22% of the fixed-line market.  

TPG is Australia’s second largest fixed-line operator with a residential subscriber base of 1.9mln.

“The combined listed company will be a more capable challenger to Telstra and Optus, and will be much better placed to invest in next generation mobile and fixed line services to benefit Australian consumers and businesses,” Vodafone’s chief executive designate Nick Read said.

READ: Vodafone shares drop as it posts slowdown in first quarter organic service revenue

Vodafone will own a 50.10% stake in the merged company, with TPG owning the remaining shares.

TPG chairman and chief executive David Teoh will become chairman of MergeCo and VHA boss Iñaki Berroeta will be managing director and chief executive of the company.

The merged company will be listed on the Australian Securities Exchange and be called TPG Telecom Limited.

Merged company to deliver cost and revenue synergies

Vodafone said the merger is expected to generate “substantial cost synergies” from the combination of two complementary networks and boost revenues through the cross-selling of products across the companies’ corporate and consumer customers.

The enterprise value of the merged group will be about US$15bn, with revenue of more than US$6bn and earnings (EBITDA) of $1.8bn. Net debt will be about US$4bn.

The merger is expected to be completed in 2019, subject to approval from TPG shareholders and regulatory authorities.

TPG and VHA sign joint venture

Separately, TPG and VHA signed a separate joint venture for a licence for the 3.6 GHz spectrum. The government is auctioning 125 MHz of 3.6 GHz band spectrum in late November.

Thu, 30 Aug 2018 07:44:00 +0100
<![CDATA[News - Vodafone shares drop as it posts slowdown in first quarter organic service revenue ]]> Fierce competition in Italy, Spain and India led to a slowdown in first-quarter organic service revenue for Vodafone Group PLC (LON:VOD).

The company said organic service revenue increased 0.3% under its new IAS 18 accounting basis in the quarter ended June 30.

Under the old IFRS 15 basis, organic service revenue rose 1.1%, slowing from the 1.6% growth recorded the same period a year ago.

Shares edged down 1.3% to 175p in mid-morning trading.

Growth driven by Europe and emerging markets 

Outgoing boss Vittorio Colao said ongoing momentum in Germany, a recovery in the UK and good growth in Africa, Middle East and the Asia Pacific region helped to mitigate tough trading in Italy and Spain along with a price war in India.

“Our commercial performance was solid, with further broadband market share gains in Europe, a record number of customers adopting our converged propositions, and the continued success of our world-leading internet of things platform,” he said.

Colao said Vodafone has received conditional approval from the Department of Telecoms for the merger of Vodafone India and Idea Cellular, which is expected to be completed in August and will “unlock sUBStantial synergies”.

READ: Vodafone shares drop as UBS cuts target price and predicts slowdown in growth

He added: “The group's overall performance (including good progress in reducing absolute operating costs for the third year running) provides us with the confidence to reiterate our outlook for the year.”

Vodafone maintains full-year guidance

Vodafone left its forecast for the year unchanged at underlying organic adjusted earnings (EBITDA) growth of 1-5% and free cash flow pre-spectrum of at least €5.2bn.

George Salmon, equity analyst at Hargreaves Lansdown, said: “The long-standing problems with telecoms is that consumers want a better deal every time they renew a contract, and there’s little to differentiate between providers other than the price they charge. That means competition between networks can be fierce. Unfortunately, that’s something Vodafone is finding out the hard way, with pricing in Spain being reassessed as a result of extra competition, and the Indian business on the cusp of being combined with a rival in an effort to front up to new challenges."

Still, there are some silver linings, he said, pointing to growth in emerging markets and more European customers taking on multiple services from the group. 

"Bundling TV, phone and broadband together is Vodafone’s solution to the age-old problem of customer retention, so investors will be keeping a keen eye on progress in from here on," he added. 

Wed, 25 Jul 2018 08:46:00 +0100
<![CDATA[News - Vodafone shares drop as UBS cuts target price and predicts slowdown in growth ]]> Vodafone Group PLC (LON:VOD) shares dipped as UBS cut its target price on the stock and said it expects the telecoms firm to report a slowdown in organic service revenue in the first quarter.

The company reports its first quarter results on Wednesday and UBS estimates organic services revenue to rise 0.1%, compared to 1.4% in the fourth quarter, due to weakness in Spain and Italy, along with an increased drag from UK handset financing.

However, UBS said this slowdown was already flagged at the fourth quarter results and since then shares have fallen 10%.

READ: Vodafone announces departure of CEO Vittorio Colao as it swings to full year profit

“VOD shares are trading at the bottom end of a five-year trading range, despite the company having transformed its portfolio and realising a tailwind from cost savings,” it said.

UBS maintained a ‘buy’ rating on the stock but lowered its target price to 250p from 255p, saying it thinks Vodafone shares are “too cheap” and the company offers a dividend yield of 7.5% for 2018.

It thinks investor expectations for the first quarter are low and a re-iteration of full-year guidance should provide reassurance.

Shares dropped 1.03% to 176p in morning trading. 

Fri, 20 Jul 2018 12:40:00 +0100
<![CDATA[News - Vodafone's generous dividend under threat, Kepler Chevreux believes ]]> Kepler Chevreux has initiated coverage of mobile phone network giant Vodafone Group PLC (LON:VOD) with a ‘reduce’ recommendation.

The group’s ability to sustain its generous dividend is a concern for the broker, taking into consideration higher free cash flow volatility related to the radio frequencies (i.e. spectrum) allocated to the mobile phone industry and Vodafone’s proposed US$21.8bn acquisition of Liberty Global’s assets in Germany and eastern Europe.

READ: Vodafone 'highly likely' to receive approval for Liberty Global deal, says Citi

Vodafone has several spectrum auctions coming up, which will delay it on the path to free cash flow growth, leaving the dividend uncovered, Kepler believes.

In the broker’s view, income investors who want exposure to the European telecoms sector would be better off putting their money into KPN, Orange or Telia.

“With c. 75% of total service revenues coming from mobile, Vodafone remains a predominantly mobile carrier. While the case for data growth is evident, the case for data monetisation is not,” Kepler argues.

Digitalisation should make Vodafone more profitable, but the group is going to have to live with higher capital expenditure, the broker added, particularly with the group having to play catch-up in fixed-line services.

The broker’s sum-of-the-parts valuation of Vodafone is 180p. Shares in Vodafone were down 1.6% at 186p in late morning trading.

Wed, 11 Jul 2018 11:19:00 +0100
<![CDATA[News - Vodafone to trial 5G mobile network technology in seven cities later this year ]]> Mobile phone networks giant Vodafone Group PLC (LON:VOD) is to try out 5G in seven major British cities in the fourth quarter of this year.

The next generation mobile broadband service will go on trial at more than 40 sites in Birmingham, Bristol, Cardiff, Glasgow, Liverpool, London and Manchester.

READ: Vodafone to be Europe's leading next generation network owner after €18.4bn Liberty Global deal

The telecoms company also said it is talking to business customers about testing augmented reality and virtual reality technology in factories, hospital and offices.

5G is the next big thing in networking technology for connected devices, holding out the prospect of speeds up to 100 times as fast as 4G and 10 times swifter than broadband to the home.

The higher speed results from the technology operating at a higher frequency than current networks but the range is not so great, which means network operators will have to erect more base stations to ensure decent coverage.

Vodafone said the trials will use the recently released 3.4GHz (gigahertz) spectrum band.

James Rogerson, of 5G-focused web site said it would make sense were the trial cities to be among the first locations to get the full 5G service once Vodafone launches it commercially.

Earlier this month, rival mobile networks operator EE, which is now owned by BT Group plc, said it would begin 5G trials in East London in October, so it is probably a small step ahead of Vodafone in terms of trials of the technology. There does not seem to be any great rush, at present, as the first 5G-capable phones and devices probably won't be on the market until 2020.

READ: BT, Vodafone, Telefonica and Hutchinson pay £1.35bn in mobile spectrum auction​

Vodafone UK chief executive Nick Jeffery said Vodafone wants to make 5G and new fibre broadband services available to consumers and businesses throughout the UK.

“We will also be bringing ultra-fast 4G to several hundred sites in hard to reach rural areas this year, building on our position as the network that offers the best voice coverage in the UK,” he added.

Shares in Vodafone were up 1.1% at 187.82p in afternoon trading.

Wed, 20 Jun 2018 14:22:00 +0100
<![CDATA[News - Vodafone 'highly likely' to receive approval for Liberty Global deal, says Citi ]]> Vodafone Group PLC’s (LON:VOD) deal to buy continental European assets from Liberty Global is highly likely to receive the go-ahead from regulators but that could be a long way off, according to Citigroup.

Earlier this month, Vodafone agreed to pay US$21.8bn to buy Liberty Global’s assets in Germany and eastern Europe to expand its business with a range of cable TV, broadband and mobile services.

Vodafone expects the deal to close by mid-2019.

Citi downgraded Vodafone to a ‘neutral’ rating, saying the deal is “structure sensible” but it might be a while before it receives clearance. 

“We believe deal clearance is highly likely but the market will likely wait to see the remedies that may be required before it credits Vodafone for the full synergy potential,” the broker said.

On Tuesday, Vodafone announced that its chief executive Vittorio Colao is to step down in October and would be replaced by chief financial officer Nick Read.

READ: Vodafone announces departure of CEO Vittorio Colao as it swings to full year profit

It also reported an attributable profit of €2.5bn, compared to a loss of €6.3bn in 2017 when the company incurred a one-off €4.5bn charge in relation to merging its India business with the country’s mobile phone provider Idea Cellular Limited.

India the 'biggest risk' to sentiment on Vodafone

Adjusted underlying earnings (EBITDA) increased 4.2% to €14.7bn. Total revenue fell 2.2% to €46.6bn but organic revenue rose 1.6% and free cash flow (FCF) increased 22% to €4.0bn.

“We look at VOD on a proportionate basis in terms of: a) revenues/ EBITDA growth; b) FCF generation; and c) leverage (3.0x and 3.8x post Liberty close and pre synergies),” Citi said.

“We see India as the biggest risk to sentiment as leverage and margin pressure raise concerns of recap needs.”

In mid-morning trading, shares in Vodafone were down 1.1% to 193.7p.

Fri, 18 May 2018 10:37:00 +0100
<![CDATA[News - Are Vodafone and BT bosses up to the challenge?, analysts question ]]> The departure of Vodafone Group PLC’s (LON:VOD) chief executive sent shares in the telecoms company lower on Tuesday as some analysts questioned whether his successor was the most suitable candidate to steer the ship in the right direction. 

Vittorio Colao will stand down in October after almost a decade at the helm of Vodafone.

He will hand over the reins to Nick Read, who has been chief financial officer for the past four years. Deputy chief financial officer will succeed Read.

Shares in Vodafone fell 3.4% to 199p in afternoon trading.

READ: Vodafone announces departure of CEO Vittorio Colao as it swings to full year profit

Under Colao’s leadership, Vodafone has undergone a restructuring to focus on its core markets in Europe and to reshape the company into a digital communications operator.  

As part of the overhaul, Vodafone has exited non-core markets, including India and the US, and embarked on a plan to expand in its core market of Europe.

Earlier this month, Vodafone agreed to buy Liberty Global’s cable operations in Germany and Central Europe in a deal valued at €18.4bn. 

Investors 'sceptical' about new Vodafone CEO

Artjom Hatsaturjants, research analyst at Accendo Markets, said: “Colao has in past sought to exit many of Vodafone’s non-core markets (e.g. India, US), but investors look sceptical about whether his replacements can steward the massive acquisition programme in Central and Eastern Europe to drive future revenue growth not just in the medium-term, but for the longer haul.

“After 10 years of stability under Colao, Vodafone is potentially setting sail into uncharted waters under the guidance of an executive that has been with the company only 4 years and has less top level experience than the markets would have been fully comfortable with.”

But another analyst pointed at the Colao has struggled to do much for the company’s share price during his tenure.

Russ Mould, investment director at AJ Bell, said Vodafone’s share price is up just 23% over the time Colao has been in charge against a 45.2% advance for the FTSE 100.

“Of course, this ignores the significant sums returned to shareholders through dividends and share buybacks and the performance of the shares under Colao may not reflect any failings on his part,” he said.

“After all, Vodafone is an established player in a mature market and has few levers to pull for growth.”

He added: “Ultimately Colao’s successor, current chief financial officer Nick Read, could also be running to stand still.”

BT's boss under pressure to turnaround the business

Likewise, some investors have been questioning whether the chief executive of rival telecoms giant BT Group PLC (LON:BT.A) can survive as he tackles the challenges of regulation, pensions, high costs and tough competition.

Gavin Patterson, who joined BT as chief executive in 2013, last week unveiled plans to cut 13,000 managerial and back-office jobs and to leave the London headquarters as part of his new strategy to reduce costs.

READ: BT Group shares drop as it slashes 13,000 jobs and revenues fall, but dividend maintained

“13,000 job cuts and a move out of central London are drastic actions, and should help deliver £1.5bn in cost savings. But they still aren’t going to be enough to dig BT out the hole it’s in,” according to George Salmon, equity analyst at Hargreaves Lansdown.

“The dividend, which was rising 10% a year not so long ago, is set to freeze for the foreseeable future, and next year’s profits look likely to fall again.”

The strategy update, which follows a tough 2017 that included an accounting scandal in Italy, came as the group reported a 1% decline in full year revenue to £23.7bn and a 2% drop in adjusted underlying earnings (EBITDA) to £7.5bn.

BT left its full year dividend unchanged at 15.4p even as it said it expects adjusted EBITDA to fall to £7.3bn - £7.4bn.

Shares have continued to drop since the full year results and strategy update last Thursday. In afternoon trading on Tuesday, shares were down 1.4% to 208p.

Vodafone returns to full year profit but revenues drop

In comparison, Vodafone said it swung to a full year profit of €2.5bn in the year to March 31, 2018 from a loss of €6.3bn last year.

However, last year’s results included a one-off €4.5bn charge in relation to merging its India business with the country’s mobile phone provider Idea Cellular Limited.

Total revenue fell 2.2% to €46.6bn, mainly due to the foreign exchange headwinds and the negative impact from the deconsolidation of Vodafone Netherlands following the creation of the VodafoneZiggo joint venture with Liberty Global.

Vodafone raised its final dividend by 2% to €0.1023, bringing the total payment for the year to €0.1507.

The full year dividend puts its yield at around 6.4%.

“Despite continued investment in the business, such as India and the Liberty Global Germany acquisition, Vodafone has again raised its dividend in view of its own confidence in prospects, and the current yield of 6.4% is a strong invitation to investors who are being paid handsomely to wait whilst the strategy unfolds,” said Richard Hunter, Head of Markets at interactive investor.

Should BT cut its dividend? 

BT’s dividend yield sit at over 7% and some analysts have asked whether it should cut the dividend or scrap it completely and invest the money elsewhere.

It could use the money for its pension scheme or to support its plans to upgrade the UK’s broadband infrastructure to improve internet speeds.

BT has agreed a new 13-year funding plan for its pension, which had a deficit of £11.3bn at the end of June. The group will pay £2.1bn into the scheme by 2020 and a further £2bn will be funded by the issuance of bonds.

READ: BT Group dives again; how much worse could it be were it to cut the divi?

“BT has paid its shareholders £10.7bn in dividends in the last decade, almost the size of its current pension deficit,” said Justin Cooper, chief executive officer of Link Market Services

“Shareholders still need the company to invest for the future, and they are on the hook for the company’s pension scheme one way or another. The big cost reductions BT has announced today will protect the dividend for the next couple of years, but its longer-term prospects are still unclear.”

BT is also under pressure by regulator Ofcom to deliver on its plans to connect fibre broadband into three million premises by the end of 2020.

It also needs to carry out the upgrade to fend off competition from the likes of CityFibre (LON:CFHL) and Vodafone, which have joined forces to build a new ultra-fast broadband network for five million homes and businesses in the UK.

In April, CityFibre agreed a £538mln takeover by a consortium formed by private equity firm, Antin Infrastructure Partners, and Goldman Sachs’ West Street Infrastructure Partners, giving the company more fire power to back its new broadband network. 

Tue, 15 May 2018 12:54:00 +0100
<![CDATA[News - Vodafone announces departure of CEO Vittorio Colao as it swings to full year profit ]]> Vodafone Group PLC (LON:VOD) shares fell on Tuesday as it announced that its chief executive Vittorio Colao is to step down in October as the telecoms giant revealed it swung to a full year profit.

Colao, who has been chief executive since July 2008, will be replaced by chief financial officer Nick Read.

Deputy chief financial officer will succeed Read at the annual general meeting in July.

Chairman Gerard Kleisterlee said: "On behalf of the board, I would like to express our gratitude to Vittorio for an outstanding tenure. He has been an exemplary leader and strategic visionary who has overseen a dramatic transformation of Vodafone into a global pacesetter in converged communications, ready for the Gigabit future.”

In mid-morning trading, Vodafone shares were down 2.7% at 201.6p.

"After 10 years of stability under Colao, Vodafone is potentially setting sail into uncharted waters under the guidance of an executive that has been with the company only 4 years and has less top level experience than the markets would have been fully comfortable with," said Artjom Hatsaturjants, research analyst at Accendo Markets.

Vodafone swings to profit but revenues fall

The announcement was made alongside the group’s financial results for the year to 31 March 2018.

Vodafone delivered an attributable profit of €2.5bn, compared to a loss of €6.3bn in 2017 when the company incurred a one-off €4.5bn charge in relation to merging its India business with the country’s mobile phone provider Idea Cellular Limited.

“We have made good progress in securing approvals for the merger with Idea Cellular in India - which is expected to close imminently - and appointed the new management team, who will focus immediately on capturing the sizeable cost synergies,” Colao said.

“In addition, we agreed the merger of Indus Towers and Bharti Infratel, allowing Vodafone to own a significant co-controlling  stake in India's largest listed tower company.”

Total revenue fell 2.2% €46.6bn, reflecting foreign exchange headwinds and the negative impact from the deconsolidation of Vodafone Netherlands following the creation of the VodafoneZiggo joint venture with Liberty Global.

Organic revenue rose 1.6% as broadband market share gains and demand for data offset a drag from new regulation that allows mobile users in the European Union to use free data roaming across the bloc.

Organic adjusted underlying earnings (EBITDA) increased 11.8% to €14.7bn, beating the company’s guidance for about 10% growth.

Excluding the negative impact of net roaming declines in Europe, the benefits of settlements in the UK and Germany and the introduction of handset financing in the UK, organic adjusted EBITDA grew by 7.9%.

Dividend hiked as Vodafone predicts earnings growth in 2019

Vodafone raised its final dividend by 2% to 10.23 cents.

“We expect to sustain our profit growth in the year ahead, despite the arrival of a new entrant in Italy and competitive pressure in Spain, supported by the third year in a row of lower net operating costs,” Colao said.

Vodafone expects organic adjusted EBITDA growth, excluding settlements and UK handset financing, of 1-5%, implying a range of €14.15-14.65bn.

Earlier this month, Vodafone agreed to buy Liberty Global’s cable operations in Germany and Central Europe in a deal valued at €18.4bn.

READ: Vodafone to be Europe's leading next generation network owner after €18.4bn Liberty Global deal

The group said the deal would create a “converged national challenger to the dominant incumbent in Germany”, Deutsche Telecom, and “transforms our predominately mobile-only operations in Central & Eastern Europe”.


Tue, 15 May 2018 07:54:00 +0100
<![CDATA[News - Berenberg trims target price for Vodafone as value of Indian venture dips ]]> German bank Berenberg has trimmed its price target for Vodafone Group PLC (LON:VOD) to 250p from 253p citing a slightly lower value of its Indian venture.

In an announcement on 25 April, Vodafone said it would merge its Indian mobile tower joint venture Indus Towers with local rival Bharti Infratel to become the world’s second largest tower mobile company.

Indian merger less valuable

In a note to clients, analysts at the bank said the merger had now devalued slightly: “The high indebtedness of the Indian joint venture (JV) (now above 7x net debt/EBITDA pro-forma), despite recent asset sales and an equity injection, means risks of a further cash injection from the group cannot be ruled out.

They added: “Previously, a sale of the group’s stake in Indus Towers could have at least facilitated this without adversely affecting group leverage. However, Vodafone’s decision to fold this stake into publicly quoted Bharti Infratel, while positive in giving investors a see-through valuation for the tower asset, means the stake is no longer as liquid and therefore debt will have to be raised at the group level to provide additional financial support if needed.”

‘Buy’ rating maintained despite India worries

The bank, however, maintained its ‘Buy’ rating on the stock, citing elements of potential upsides in its investment case that were obscured by the concerns around the company’s Indian assets.

“Support from European broadband and AMAP should help group service revenue trends stay in positive territory (c1% in hard currencies). Meanwhile, digitisation and recent regulatory concessions in AMAP should lead to EBITDA CAGR of 3%” Berenberg said, adding that while they agreed with solvency concerns around India, it was “an industry-wide problem that will inevitably have to result in government-led relief or competitors being acquired by [Indian mobile network operator] Jio, both outcomes of which are positive.”

Analysts also commented that the proposal from the European Parliament regarding symmetric regulation is far less negative than it may seem for Vodafone’s recent €18.4bn deal to purchase operations from US cable giant Liberty Global.

READ: Vodafone to be Europe's leading next generation network owner after €18.4bn Liberty Global deal

More generally, the bank said results for the second half of the year due on 15 May should reassure on organic prospects.

Analysts commented: “We think there is scope for a slightly stronger H2 EBITDA performance than consensus expects with organic growth for underlying EBITDA at about 7% (H1: 9%).

“This, together with a 2018/19 outlook for low single-digit organic growth for underlying EBITDA (we are at 3% while consensus is at 2%), should serve as a reminder that service revenue, EBITDA and free cash flow growth are not at risk of declines from an Italian price war as the valuation seems to suggest” they added.

In mid-morning trading Friday, Vodafone shares were up 0.6% at 211.4p.

Fri, 11 May 2018 10:45:00 +0100
<![CDATA[News - Vodafone's European expansion is bad news for Deutsche Telekom but could also lead to a shake-up in UK market ]]> The push by Vodafone Group PLC (LON:VOD) to become Europe's biggest quad-play telecoms, broadband and media provider will mean big competition for German heavyweight Deutsche Telekom AG but could also lead to changes in the UK telecoms market, according to analysts.

The FTSE-100 listed mobiles telecoms giant is acquiring operations in four European countries - Germany, Czech Republic, Hungary and Romania - from US cables giant Liberty Global for an enterprise value of €18.4bn.

READ: Vodafone to be Europe's leading next generation network owner after €18.4bn Liberty Global deal

The move will see Vodafone’s European network extended to 54mln cable/fibre homes 'on-net' and a total reach of 110mln homes and businesses.

David Madden market analyst at CMC Markets UK pointed out: “The motivation behind the move is to challenge Deutsche Telekom’s dominance in Germany.

“It would allow Vodafone to offer more competitive packages to customers, and it is estimated that the transaction would lead to savings of €1.5 billion through synergies.”

Deutsche Telekom shares fell back on the news as its hegemony looks to be threatened, and some analysts suggested European Union regulators may have concerns over the deal, raising a risk that it doesn’t happen.

Where does the money go?

But if the move does succeed, Neil Wilson, chief market analyst at thinks it could also lead to a shake-up of things in the UK.

Wilson pointed out that the question to ask now is where does Liberty Global boss John Malone deploy that big chunk of cash?

The analyst thinks the UK “may be in his sights”, with Liberty Global - already the owner of cable broadband provider Virgin Media - owning a big stake in commercial broadcaster ITV plc (LON:ITV).

Wilson added: “The much-rumoured bid for ITV could be on the cards although Liberty may in fact be minded to go after o2 ahead of its much-rumoured stock market listing.”

The analyst said: “Tying up the assets of Virgin and o2 to offer bundled services/quad-play in the UK may be the number one option."

“One thing is for sure, with the mounting costs of building out network capacity and 5G etc, telecoms firms have decided they need to combine or merge assets to have the necessary scale,” Wilson concluded.

Wed, 09 May 2018 15:35:00 +0100
<![CDATA[News - Vodafone to be Europe's leading next generation network owner after €18.4bn Liberty Global deal ]]> Vodafone Group PLC (LON:VOD) is set to become Europe's leading next generation network owner after agreeing to acquire operations in four countries from US cable giant Liberty Global for an enterprise value of €18.4bn.

Vodafone - the world's second biggest mobile operator - said in February that it was in talks about buying Liberty Global's assets in continental Europe where they overlap - Germany, Czech Republic, Hungary and Romania.

READ: Vodafone unlikely to overpay for Liberty Global assets or cut dividend, says Numis

The move will see the FTSE 100-listed group become the leading next generation network owner in Europe, with 54mln cable/fibre homes 'on-net' and a total reach of 110mln homes and businesses, including wholesale arrangements.

The group said it estimates cost and capex synergies from the deal of approximately €535mln per year before integration costs by the fifth year post completion, with an estimated net present value of over €6bn after integration costs.

It added that it sees revenue synergies with a net present value exceeding €1.5bn from cross-selling to the combined customer base.

Vodafone’ s chief executive Vittorio Colao commented: "This transaction will create the first truly converged pan-European champion of competition. It represents a step change in Europe's transition to a Gigabit Society and a transformative combination for Vodafone that will generate significant value for shareholders.”

In afternoon trading, Vodafone shares were 1.1% higher at 209.9p.

David Madden, market analyst at CMC Markets UK, commented: “The motivation behind the move is to challenge Deutsche Telekom’s dominance in Germany. It would allow Vodafone to offer more competitive packages to customers, and it is estimated that the transaction would lead to savings of €1.5 billion through synergies.”

 -- Adds share price, analyst comment --

Wed, 09 May 2018 07:46:00 +0100
<![CDATA[News - Vodafone to become premium partner for ESL esports series ]]> Vodafone Group PLC (LON:VOD) said it has become a premium partner of the world’s largest esports company, ESL, and will sponsor its upcoming flagship event series.

The FTSE 100 mobile network operator said the event series would include the Intel Extreme Masters (IEM), ESL One and ESL Pro League events, with the agreement including a live broadcast segment, ‘The Vodafone View’, content and advertising distribution, as well as branding and activation at the events.

READ: Vodafone unlikely to overpay for Liberty Global assets or cut dividend, says Numis

Vodafone added that it would also work with ESL to support a series of initiatives to promote diversity and female participation in esports by acting as premium partner of the female esports challenge at the IEM live event in Sydney in May 2018, as well as collaborating with the world's top female esports personalities to highlight the opportunities for women in the industry.

Serpil Timuray, chief operations & strategy officer at Vodafone, said: "We are delighted to launch this partnership with ESL and create one of the biggest international networks for esports at a time when audiences are growing rapidly and new technologies are poised to deliver better experiences.”

Ralf Reichert, chief executive of ESL, added: "We are thrilled to partner with Vodafone as our new telecommunication partner for various events,

"Together with Vodafone we are looking forward to connect even more people and create diversity in esports by ensuring better technological conditions for professional players, fans and ESL employees, fostering corporate responsibility projects and creating awareness around the esports industry to a broader audience.”

In early trading Thursday, Vodafone shares were up 0.5% at 210.1p.

--Adds share price--

Thu, 26 Apr 2018 08:15:00 +0100
<![CDATA[News - Vodafone unlikely to overpay for Liberty Global assets or cut dividend, says Numis ]]> Vodafone Group PLC (LON:VOD) is negotiating on the possible acquisition of Liberty Global's assets from a position of strength so is unlikely to overpay, Numis said.

In February, Vodafone announced that it was in early stage talks to buy some of Liberty’s European assets.

Numis said in a note to investors on Friday that Vodafone is in a good position to negotiate because it now has some “sizeable” assets of its own in Europe and “sensibly priced” wholesale access to third-party fixed-line networks.

The broker also believes Liberty is showing “much more humility” than it did a year ago as the company is convinced that fixed line and mobile convergence is a certainty but does not work for cable networks that reach only a small proportion of each market.

Risk Vodafone will cut dividend 'very low', says Numis

“In Germany, Liberty's asset reaches just c.30% of all properties so we think Liberty believes it has to exit sooner rather than later, no matter how well this asset is growing currently,” Numis said.

“As a result of all the preceding points, we believe Vodafone will not overpay for Liberty’s asset in Germany (we think more than 10 times EBITDA is fair) and Vodafone will not have to also buy Liberty out of the Dutch market.

“In turn, risks that Vodafone will issue new shares or cut its dividend per shares are very low.”

Shares rose 1.5% to 209.90 in late morning trading.

Numis remains bullish but cuts target price

Numis left its rating on the stock at ‘buy’ but cut its target price to 255p from 270p due to “numerous individually small reasons” such as higher estimates for spectrum costs.

“Our target price reflects our view that the stock should trade at a small EV/EBITDA premium to the out-of-favour sector rather than a small discount currently - relative to some listed telecom companies, we believe VOD is better managed and gaining more control of its destiny faster,” Numis said.

Vodafone was among the successful bidders in Ofcom’s 4G and 5G airwave spectrum auction earlier this month.  It won 50 MHz of the 3.4 GHz spectrum that is earmarked for 5G at a cost of £378.24mln.

Ahead of Vodafone’s full year results on May 15, Numis downgraded its underlying earnings (EBITDA) forecasts by 1-2%.

India the 'only real problem asset' for Vodafone

Numis, however, believes market reaction to revenue key performance indicators in the third quarter was “over the top”.

READ: Vodafone's quarterly revenue drops on impact of Dutch unit sale and forex

Regarding sales prospects in Europe, Numis thinks regulatory cuts to mobile prices are now immaterial and Vodafone keeps growing in fixed line.

On the competition the company faces from new Italy mobile entrant Iliad, Numis reckons “many overestimate Iliad and underestimate Vodafone”.

Numis said the only real problem asset in the Europe and Africa, Middle East and Asia Pacific region its India subsidiary, which has been weighed down by tough competition.

However, Vodafone is close to completing the merger of the India unit with Idea Cellular and thus initiating a major self-help programme, the broker added.

“Also, India now has two-thirds of fewer mobile network operators and just three large players remain,” Numis said. 

Fri, 20 Apr 2018 10:57:00 +0100
<![CDATA[News - Vodafone Group tipped to show strong full year earnings ]]> Vodafone Group PLC (LON:VOD) is expected to highlight strong earnings and free cash flow growth when it releases full year results next month, that’s according to Morgan Stanley.

The US bank repeated an ‘overweight’ rating for the mobile telecoms firm whilst telling investors that the recent market concerns are “overdone”.

READ: Vodafone deal to buy Liberty Global assets would increase free cash flows

Analyst Emmet Kelly noted that the recent share price tail-off was driven by the consensus miss for the third quarter, concerns over trends in the Indian business, a lack of visibility on a possible deal with Liberty Global and a higher outlay on network spectrum over the coming 24 months.

Kelly downgraded Morgan Stanley’s price target to 270p, from 280p, which still suggests significant upside to the current price of 204.75p.

The analyst said Vodafone is likely to beat guidance for the last financial year, and also highlights that ongoing telecoms consolidation and potential monetisation of mobile towers as other possible catalysts for the share.

Tue, 10 Apr 2018 11:23:00 +0100
<![CDATA[News - Vodafone deal to buy Liberty Global assets would increase free cash flows, says Citi ]]> Vodafone PLC’s (LON:VOD) free cash flow would receive a boost if talks to buy large parts of John Malone’s European cable group Liberty Global result in a deal, according to Citigroup.

The FTSE 100-listed company confirmed it was in discussions with Liberty Global in February about buying some of the cable company’s assets in the continental European countries where they both operate.

Liberty’s Unitymedia business in Germany would help Vodafone to take on the country’s leading broadband provider Deutsche Telekom.

“We think a potential debt and hybrid funded deal to buy Unitymedia for €15.8 - 19.0bn (10-12x FY19 OCF) would add €700-830m or 12-15% to Vodafone's free cash flow,” said Citi.

Citi upgraded Vodafone to a ‘buy’ rating from ‘neutral’ on a lowered target price of 220p.

The broker added: “Vodafone's markets remain competitive but Germany and Spain look to us to be structurally attractive for the long term, the UK is improving, the Netherlands may have stabilised and India could end up with a much more appealing market structure.

“On the other hand, conditions look set to get tougher in Italy and near term.”

READ: Vodafone's quarterly revenue drops on impact of Dutch unit sale and forex

Shares in Vodafone edged up 0.31% to 194.6p in morning trading. 

Wed, 04 Apr 2018 10:49:00 +0100
<![CDATA[News - Vodafone issues trio of news, including smart home link with Samsung Electronics ]]> Vodafone Group PLC (LON:VOD) unveiled a trio of news announcements today including an exclusive partnership with Samsung Electronics Co.Ltd to develop and launch a range of consumer Internet of things (IoT) ‘Smart Home’ product and services in selected European markets.

The service, named ‘V-Home by Vodafone’ will bring together its IoT system and Samsung’s ‘SmartThings’ open platform. It will send immediate alerts to customer’s phones in the event of a home intrusion. It also enables simple remote automation of home appliances and utilities, including voice activation via home voice assistants.

READ: Vodafone Group announces world first in trial of drone traffic control system

The FTSE 100-listed company said the new service will be launched in Germany and Spain in the second quarter of 2018, and it will continue to expand it throughout the year, offering more products and services.

Vittorio Colao, chief executive of Vodafone, said: “The IoT is already transforming the world of work; now, it will transform the home.”

'Big Data for Good'

In the separate statement on Monday, Vodafone also announced it is pioneering a ‘Big Data For Good’ programme in Ghana.

The company said the new programme will use aggregated anonymised mobile data to track real-time trends in population movement. The data will be analysed to provide life-saving insights during a widespread epidemic and government departments will be able to allocate resources more efficiently and identify the areas at increased risk of new outbreaks.

They said the level of activity at each mobile phone mast can provide a ‘heat map’ of where people are and how far they are moving during the outbreak, while anonymised data can be used for decision making.

Joakin Reiter, Vodfone's external affairs director, said: “As we can now measure human mobility, it is possible to model how infections spread. This has the potential to save thousands of lives.”

Vodafone Qatar stake sold

And later on, Vodafone also announced that Qatar Foundation LLC will acquire its 51% stake in the joint venture company that controls Vodafone Qatar.

The group said Qatar Foundation will pay a total cash consideration of €301mln to acquire the stake, with €279mln payable at completion, which is expected in the next three months, and the balance 12 months later.

The group said the transaction values Vodafone Qatar at an enterprise value of €1.451bn.

The UK firm said it has entered into a partner market agreement with Vodafone Qatar with an initial term of five years from completion.

In early afternoon trading, Vodafone shares were up 0.6% at 205.05p.

 -- Adds Vodafone Qatar deal news, share price --

Mon, 26 Feb 2018 08:58:00 +0000
<![CDATA[News - Vodafone Group announces world first in trial of drone traffic control system ]]> Vodafone Group PLC (LON:VOD) has said that it is to test the world’s first air traffic control system for drones on a mobile network.

The FTSE 100-listed telecoms provider said that it would work alongside the European Aviation Safety Agency on the trials, to be undertaken in Germany and Spain.

READ: Vodafone upgraded to 'buy' by Numis as broker predicts earnings growth

The company hopes to make drone tracking and safety technology available for commercial use in 2019.

The system will not be used to track consumer drones but larger remote vehicles currently being developed for commercial uses.

It will be able to track drones up to a height of around 400 metres and for any device going higher to descend.

Vodafone shares were up 0.4% in early morning trading at 204.4p.

-- Add share price --

Tue, 20 Feb 2018 08:04:00 +0000
<![CDATA[News - Vodafone upgraded to 'buy' by Numis as broker predicts earnings growth ]]> Vodafone PLC’s (LON:VOD) third quarter service revenue met market forecasts but the prospects for sustained and accelerated earnings growth are intact, Numis said in a note to investors.  

Numis raised its rating on the stock to ‘buy’ from ‘add’ and left its target price at 270p. Last week, the company reported a 1.1% rise in third quarter organic service revenue, compared to 1.3% growth the previous quarter, as it tackled new mobile roaming regulations in Europe and a shift towards SIM-only contracts. 

READ: Vodafone's quarterly revenue drops on impact of Dutch unit sale and forex Too soon to think Vodafone will spend more cash in India

The struggling India division continued to contend with price competition but Numis thinks it is too early to believe Vodafone will have to inject more cash into the business.

In March 2017, the company announced a deal to combine its Vodafone India subsidiary with Idea Cellular. Vodafone and Idea recently agreed on an extra cash injection of up to €1.8bn, raised €1bn from selling standalone towers and will raise €1bn from selling an 11% stake in Indus Towers.

Numis pleased Vodafone not exiting UK

Vodafone is also in early talks to buy some of Liberty Global's assets in the continental European countries where they both operate.

The news comes two years after discussions between the pair collapsed.

“Buying Liberty out of Germany would double Vodafone’s cable footprint to c.60% of the country,” Numis analyst John Karidis.

“Because of this, cable's long and enduring value, and the total worth of Germany's market, we doubt investors will begrudge VOD if it pays a full multiple (11-12x EBITDA).”

Numis added that it was glad Vodafone is not exiting the UK as this “could hurt its global Enterprise business”.

Shares in Vodafone fell 2.3% to 214.3p in morning trading. 

Mon, 05 Feb 2018 10:18:00 +0000
<![CDATA[News - Vodafone's quarterly revenue drops on impact of Dutch unit sale and forex ]]> Vodafone Group PLC (LON:VOD) posted a drop in third quarter revenue, reflecting the sale of its Dutch sUBSidiary and foreign exchange headwinds.

Revenue fell 3.6% to €11.8bn in the three months ended 31 December 2017, including a 3.8 percentage point impact from the sale of Vodafone Netherlands to Deutsche Telekom subsidiary T-Mobile Nederland and a 3.5ppts hit from foreign exchange rate movements. 

Shares fell 3.59% to 216.5p around noon.

READ: Vodafone earnings to benefit from growing top line and cost savings, says UBS

Vodafone completed the disposal in December 2016 as a concession to European Union regulators to gain approval for the merger of its Dutch operations with Liberty Global’s Dutch subsidiary Ziggo.

Service revenue increased 1.1% on an organic basis, easing back from the 1.3% growth reported in the second quarter.

Vodafone had a more promotional quarter in some European countries, particularly in Spain, as it tackled new mobile roaming regulations and a shift towards SIM-only contracts. 

As a result, organic service revenue growth in Europe moderated to 0.3% from 0.8% in the second quarter.

In the Africa, Middle East, Asian and Pacific region, organic service revenue growth accelerated to 6.8% from 6.2% the previous quarter, driven by an increase in customers and an improvement at its South African mobile business Vodacom.

Price war rages on in India

The struggling India division continued to contend with price competition with organic service revenue falling 23.1%.

In March 2017, the company announced a deal to combine its Vodafone India subsidiary with Idea Cellular, joining forces to tackle a price war in the world's second-largest mobile-phone market.

“While the competitive and regulatory environment in India remains intense, we continue to make good progress in securing the required approvals for the merger with Idea Cellular, and we have taken steps to strengthen the combined company's financial position,” said chief executive Vittorio Colao.

Vodafone tops 100mln 4G customer milestone

Data usage grew 61% during the third quarter as the number of 4G customers jumped 57% to a milestone of 105 million with smartphone usage continuing to grow rapidly.

"The modern world is hungry for mobile data, as more services ranging from music streaming to banking move over to smartphones," said Laith Khalaf, senior analyst at Hargreaves Lansdown.

"Vodafone stands in a position to capitalise on this trend and has seen a big jump in its 4G customer base, which now stands at over 105 million.

"However monetising the data needs of the smartphone generation is more tricky, which is why Vodafone is trying to tempt customers to upgrade through “more for more” propositions."

The company achieved 379,000 broadband net additions for its fixed lines.

The enterprise business grew service revenue by 0.4%, compared to 0.5% in the previous quarter, as emerging market growth and a strong performance in its fixed-line services offset the impact of tough regulation.

Full year guidance maintained

“Overall, this consistent performance underpins our confidence that we will meet our guidance for the full year,” said Colao.

The group expects full year organic adjusted underlying earnings growth of 10%, implying a range of €14.75bn to €14.95bn, and predicts free cash flow pre-spectrum will exceed €5bn.

The unchanged earnings guidance for the full year "should provide reassurance to the large number of people who own the shares purely for its generous dividend, currently yielding in the region of 5.7%", according to AJ Bell investment director, Russ Mould.

Thu, 01 Feb 2018 07:44:00 +0000
<![CDATA[News - Vodafone earnings to benefit from growing top line and cost savings, says UBS ]]> Vodafone Group PLC (LON:VOD) will deliver an underlying earnings increase of 6% per annum over coming years as it benefits from a growing top line and cost savings, UBS predicts.

UBS maintained its ‘buy’ rating the stock but raised its target price to 285p from 280p to reflect the recent strengthening of the South African Rand.

READ: Vodafone's dividend well covered, says Barclays as it upgrades stock to 'overweight'

Vodafone owns a majority stake in South Africa’s Vodacom.

“Despite the recent rally in the shares, we think there is more to go for and see upside from mobile data monetisation, cost savings and mergers & acquisitions,” the bank said.

UBS expects the third quarter trading update in February to reveal organic service revenue (OSR) rose 1.3%, in line with the level of growth reported in the second quarter.

Excluding the drag from low margin and volatile carrier services revenue, UBS estimates third quarter OSR of 1.8%, compared to 1.7% in the second quarter.

The third quarter should be helped by the fading effects of Germany's cut to mobile termination rates, UBS said. This will be offset by price rises in Italy where UBS expects OSR to decline.

READ: Vodafone ends plans to merge Malta unit with Melita

Growth in Spain should be healthy, UBS said, but will slow quarter-on-quarter due to increased promotional activity across the market. 

The UK should see underlying OSR growth but this is masked by the impact of handset financing, the bank added.

“We see Vodafone as cheap, offering a 7.6% EFCF (equity free cash flow) yield on a calendarised basis for 2018 and a 5.9% dividend yield ,” the bank said.

“Despite the recent rally,  the Vodafone share price is only at similar levels to September 2016 when Reliance Jio entered the Indian market.”

Thu, 04 Jan 2018 09:50:00 +0000
<![CDATA[News - Vodafone's dividend well covered, says Barclays as it upgrades stock to 'overweight' ]]> Vodafone Group PLC (LON:VOD) shares gained as Barclays Capital upgraded the stock, saying the dividend is well covered despite concerns about its sustainability.

Barclays said the telecoms company is its “top pick” of the sector as it raised its rating on the stock to ‘overweight’ from ‘underweight’ and lifted its target price to 280p from 230p.

READ: Vodafone shares jump as it lifts full year guidance after first half profits grow

“Vodafone offers a 2018 March 6% dividend yield, and yet many question its sustainability, not just its potential to grow,” the bank noted.

“People also question how Vodafone will be able to monetise data, and the extent to which convergence presents competitive/strategic risk; whether regulatory headwinds will ever end; when cost cutting will be net vs gross; when capital expenditure will stop increasing; and whether Vodafone will merge with Liberty Global.”

But Barclays sees this as a “rear view mirror” way of looking at Vodafone with such arguments “far less relevant” thanks to an underlying earnings (EBITDA) compound annual growth rate of 4-5% in the next three years and positive revenue momentum.

The bank said Vodafone’s dividend has not been covered by free cash flow over the past years but this has changed as organic service revenue and EBITDA are now “firmly positive, giving operating leverage benefits along with cost opportunities from digitalisation”.

“We believe the dividend is now well covered, even post spectrum,” it said.

READ: Vodafone enters into strategic alliance with Japan's Softbank

Barclays lifted its forecasts for EBIDTA in fiscal years 2019 and 2020, by 1.6% and 3% respectively due to greater cost discipline. It expects 1.7% organic service revenue growth in 2019 compared to 1.1% previously.

“Vodafone has demonstrated its ability to grow fixed line revenues and market share in all its key markets in recent periods through a combination of self-build and wholesale agreements.”

Shares edged up 0.75% to 229.55p in morning trading. 

Fri, 08 Dec 2017 09:15:00 +0000
<![CDATA[News - Vodafone ends plans to merge Malta unit with Melita ]]> Vodafone (LON:VOD) has pulled out of plans to merge its Malta business with Melita after failing to receive regulatory approval.  

The London-listed telecoms giant said the companies were unable to satisfy the Maltese Competition Authority’s requirements and has therefore decided to ditch the proposed deal.

READ: Vodafone enters into strategic alliance with Japan's Softbank

Vodafone and Melita owners, Apax Partners Midmarket SAS and Fortino Capital, announced the proposed merger in May. 

Fri, 08 Dec 2017 08:08:00 +0000
<![CDATA[News - Vodafone enters into strategic alliance with Japan's Softbank ]]> Vodafone PLC (LON:VOD) has entered into a strategic alliance with Japanese telecoms firm Softbank Corp. to enhance mobile services to businesses in Japan.

The two companies will combine forces to expand commercial and operational support services for Vodafone's enterprise customers operating in Japan.

READ: Vodafone shares jump as it lifts full year guidance after first half profits grow

"This strategic alliance brings together two of the world's leading communications companies to provide enterprise customers with the most innovative and responsive service and support in Japan,” said Diego Massidda, the chief executive of Vodafone Partner Markets.

READ: Vodafone sells mobile phone towers in India to American Tower

The alliance comes more than 11 years after Softbank took over Vodafone's Japanese mobile unit for about US$15bn after the London-listed group struggled with the loss of customers in the nation.

Tue, 05 Dec 2017 07:15:00 +0000
<![CDATA[News - Vodafone shares jump as it lifts full year guidance after first half profits grow ]]> Vodafone PLC (LON:VOD) rallied as it raised its full year earnings guidance after reporting an increase in first half profit and organic revenue.

The telecoms giant now expects organic adjusted underlying earnings (EBITDA) to rise 10% in the year, implying a range of €14.75 - €14.95bn, compared to a previous forecast of 4-8% growth. 

READ: Vodafone sells mobile phone towers in India to American Tower

The new estimates were ahead of the consensus forecast for 7% growth, sending shares up 5.12% to 226.95p in afternoon trading. 

The company said the improved outlook reflected stronger-than-expected underlying revenue growth in Europe and a later-than-expected commercial launch of a new entrant in Italy.

First half earnings rise

In the six months to 30 September, Vodafone reported a 13% increase in organic adjusted EBITDA to €7.4bn as the adjusted EBTIDA margin improved by 2.5 percentage points to 32%.

Excluding the impact of net roaming declines in Europe and the benefits in the UK from the introduction of handset financing and regulatory settlements, organic adjusted EBITDA increased 9.3%.

Organic service revenue rose 1.7% in the first half, driven by mobile data and broadband.

The second quarter saw a slowdown in organic service revenue growth to 1.3% from 2.2% in the first quarter, reflecting tough comparatives and a lower contribution from carrier services in the Africa, Middle East and Asia Pacific region.

Total revenue hit by deconsolidation of Dutch arm

Total revenue for the first half fell 4.1% to €23.1bn, with the group blaming the deconsolidation of its Vodafone Netherlands and foreign exchange headwinds.

The telecoms giant said its joint venture between Vodafone Netherlands and Ziggo, in which it owns a 50% stake, was hit by intense price competition in its mobile operations.

READ: Vodafone takes aim at BT through lightning fast telecoms network deal with CityFibre

The India division was also hurt by price competition, resulting in continued losses and lower revenues, but this was excluded from the group's first half figures.

Vodafone announced in March that it was merging its loss-making Indian mobile phone business with Idea Cellular after failing to list the unit.

On Monday, the company said it has agreed to sell ATC Telecom Infrastructure, a joint venture between Vodafone India and Idea that includes a network of 20,000 mobile phone towers across the country, to American Tower Corp. for 78.5bn rupees.

“In India competition remains intense,” said Vodafone chief executive Vittorio Colao.

“There are however signs of positive developments in the Indian market, with consolidation of smaller operators and recent price increases from the new entrant. We are making good progress in securing regulatory approvals for our merger with Idea Cellular and in monetising our tower assets.”

Expansion continues

Colao added that in the second half of the year the company will continue to implement strategic initiatives, including fibre infrastructure expansion in Germany, Portugal and the UK along with its entry into the consumer internet of things (IoT) market.

Vodafone in October announced that it launched "V by Vodafone" network, allowing consumers to connect home and leisure electronics products to its dedicated global IoT network.

Last week, the company unveiled a partnership with CityFibre to install one million new ultrafast connections in 12 cities by 2021 with a possible extension to cover five million homes by 2025. The project could prove a challenge for Openreach, which owns most of the UK's fibre network, and cable operator Virgin Media.

Vodafone hikes dividend, UBS repeats 'buy' rating

Vodafone raised its interim dividend by 2.1% to 4.84 euro cents as the group achieved free cash flow of €1.3bn, compared to a decline of €0.1bn the same period a year ago.

Net debt rose to €32.1bn at the end of September from €31.2bn at the end of March, as free cash flow and net proceeds from the sale of shares in South African mobile company Vodacom were offset by the payment of last year's final dividend of €2.6bn.

UBS reiterated a 'buy' rating and target price of 270p on the stock, saying it believes Vodafone is "too cheap", offering an 8% calendarised free cash flow yield for 2018 and a 6% dividend yield.

"We think consensus organic service revenue trends for Q3 will be similar to Q2 but should improve in Q4 as regulatory drag drops away.

Tue, 14 Nov 2017 08:33:00 +0000
<![CDATA[News - Vodafone takes aim at BT through lightning fast telecoms network deal with CityFibre ]]> Telecoms giant Vodafone PLC (LON:VOD) and AIM-listed CityFibre (LON:CHFL) are joining forces to build a new ultra-fast broadband network for 5mln homes and businesses in the UK.

The fibre–optic FTTP (fibre-to-the- premises) network will be capable of carrying one gigabit (I,000 mbps) of data to the door of the user.

CityFibre will build, own and operate the network with Vodafone having exclusive rights to market ultrafast consumer broadband services for a set period.

Moving towards 'full fibre'

In the initial phase, costing £500mln, one million homes in twelve cities currently supplied by CityFibre will be upgraded. The agreement has an option to expand this to five million homes by 2025.

Broadband speeds are a huge source of frustration for UK consumers, with BT and telecoms regulator Ofcom at loggerheads over the speed that the traditional copper network is being upgraded.

Vodafone said the partnership with CityFibre represented “one of the most significant developments in UK telecommunications since the launch of ADSL broadband around 17 years ago”.

The new network would deliver 50% of the UK government's target of 'full fibre' to 10mln homes and businesses as well as providing high-capacity backhaul connections required for the next generation of 5G mobile services.

Significant development?

In a dig at BT, Vodafone added the new network would provide a superior product at a lower cost and better service than the legacy copper telephone line broadband network.

Greg Mesch, CityFibre’s chief executive,  said the partnership would unlock the UK's full fibre future and establish an unassailable wholesale infrastructure position across 20% of the UK broadband market. 

Nick Jeffery, Vodafone UK chief executive added: “The UK has fallen far behind the rest of the world, trapped by the limited choice available on legacy networks. “

Thu, 09 Nov 2017 08:40:00 +0000
<![CDATA[News - Vodafone sells 5.2% stake in South Africa's Vodacom ]]> Vodafone Group PLC (LON:VOD) has raised ZAR14.85bn through the sale of a 5.2% stake in South African mobile network operator Vodacom Group Ltd.  

The company’s wholly-owned subsidiary, Vodafone International Holdings B.V., sold an aggregate of 90 million ordinary shares in Vodacom.

READ: Vodafone signs partner market agreement with South Korea's LG Uplug

Vodafone now indirectly owns 1,110,629,881 ordinary shares, representing a 64.5% stake, in Vodacom following the completion of the placing.

In May, Vodafone transferred a 35% indirect holding in Kenyan mobile network Safaricom Ltd to Vodacom for €2.36bn, in an effort to streamline its holdings in sub-Saharan Africa.

The all-share deal saw Vodafone International receive 226.8 million new ordinary shares in Vodacom, increasing its stake in Vodacom from 65% to 70%.

READ: Vodafone a top FTSE 100 riser after first quarter service revenue growth accelerates

Vodafone said in today’s statement that it has agreed not to sell, distribute or dispose of any ordinary shares in Vodacom that are not sold in the placing for 90 days after completion.

Separately, the company announced that has purchased 9,523,139 ordinary shares at an average price of 216.8p per share from JP Morgan Securities PLC as part of a buyback programme announced last month.

Shares in Vodafone fell 0.74% to 214.70p.

Wed, 06 Sep 2017 09:25:00 +0100
<![CDATA[News - Vodafone a top FTSE 100 riser after first quarter service revenue growth accelerates ]]> Vodafone Group plc (LON:VOD) was one of the biggest risers on the FTSE 100 today after a well-received first quarter trading update, which revealed a 2.2% increase in organic service revenue to €11.5bn. 

Organic service revenue, adjusted for currency movements and the restructuring the business, was supported by growth in all its operations, excluding the India and UK markets. In fourth quarter, organic service revenue increased 1.5%. 

Reported revenue, which includes foreign exchange headwinds and the impact of deconsolidating its Netherlands business, fell 3.3% to €11.4bn.

READ: Vodafone's signal boosted by price target hikes from both Deutsche Bank and Berenberg

Vodafone sold its Netherlands subsidiary to T-Mobile Nederland late last year as a concession to European Union regulators in order to gain approval for a merger of its Dutch operations with Liberty Global’s Netherlands cable company, Ziggo.

In March, the company also agreed to combine its India operations with local provider Idea Cellular amid a mobile price war in the nation. The merger is expected to be completed in 2018 and Vodafone will own 45.1% of the combined group while Aditya Birla Group, Idea’s parent company, will own 26%.

Vodafone excluded its India business from the total quarterly revenue amount but said services revenue in the nation fell 13.9% due to competitive pricing, triggered by India’s richest man, Mukesh Ambani, and his new operator Reliance Jio. However, Vodafone said quarterly trends are “stabilising” and it is seeing an improvement in average revenue per user (APRU) in the low-value segment, mitigating pricing pressure in the mid and high-value segments.

UK service revenue drops, Italy and Spain deliver strong performance

Closer to home, UK service revenue declined 2.7%, slowing from the 4.8% decrease in the fourth quarter as APRU grew in consumer mobile on price increases and as carrier services recovered.

"While these latest results show that Vodafone is operating a relatively stable business in many foreign markets, the impact of Brexit on its UK operations is already being felt," said Matthew Kendall, chief telecoms analyst at The Economist Intelligence Unit.

"Although the rate of UK revenue decline slowed in this quarter, the falling value of the pound and the adverse impact of the abolition of EU roaming charges are areas of concern for its domestic business going forward."

In Germany, service revenue growth slowed to 0.6% from 1.2% the previous quarter, in part due to lower mobile wholesale revenues. Italy continued to deliver a strong performance with service revenue up 3.2%, compared to 2.8% in the fourth quarter, while Spain achieved a 1.6% rise following a 1.3% gain in the prior three months.

The Africa, Middle East and Asia Pacific region saw service revenue jump 10.0%, driven by robust growth in Turkey and Egypt.

"Rising competition has seen India hit a significant speedbump, jolting Vodafone to the extent that it took a multi-billion euro write-down and split the Indian operation from the wider group," said George Salmon, equity analyst at Hargreaves Lansdown.

 "While Vodafone is still feeling the effects of this body blow, first quarter results paint a far more favourable picture of the European businesses."

Vodafone adds mobile and broadband customers

Vodafone said it now has 83.5 million customers for 4G mobile date across its 22 countries, adding 8.8 million in the first quarter.

For its broadband services, it added 300,000 customers in the quarter, bringing the total to 15 million.

Its Enterprise business, which provides telecommunications and IT services to large corporations, saw revenues rise 1.5% after a 2.0% increase in the fourth quarter, boosted by its Internet of Things platform 

Vodafone reiterates full year estimates 

Vodafone said its first quarter results were in line with expectations and left its guidance for 2018 unchanged.

“In addition, we are executing our 'Fit for Growth' cost efficiency programme in line with our plans,” said chief executive Vittorio Colao.

“Overall, this performance gives us confidence in reiterating our outlook for the year."

Shares rose 1.31% to 226.60p in late afternoon trading. 


-- Updates share price--


Fri, 21 Jul 2017 08:04:00 +0100
<![CDATA[News - Vodafone's signal boosted by price target hikes from both Deutsche Bank and Berenberg ]]> Mobile telecoms giant Vodafone PLC (LON:VOD) got a boost today from price target hikes by two different German brokers today – Deutsche Bank and Berenberg.

In reaction, in mid morning trading, the FTSE 100-listed firm’s shares were 0.9%, or 2.0p higher at 223.05p.

In its note to clients, Deutsche Bank repeated its ‘buy’ rating on Vodafone as it raised its target to 300p from 285p after hiking estimates following the firm’s full-year results last month.

READ: Vodafone shares gain as it reports wider full year loss but points to growth in 2018

The Deutsche analysts noted that the mobile telecom provider’s guidance for underlying earnings (EBITDA) growth and the fact its free cashflow is well above the dividend has gone down well with investors, with Vodafone shares up 9% since the results release on May 16.

Although they noted that the group’s organic service revenue (OSR) growth will reverse in the second quarter due to the roaming charge changes in Europe, they think that headline OSR growth will start to catch up with underlying from the third quarter.

The analysts think OSR could potentially be super-charged then by a recovery in handset sales - with a new model launch scheduled by Apple Inc (NASDAQ:AAPL)  - while operating leverage for mobile service revenue growth should improve further as Europe moves back into positive territory.

They also concluded that Vodafone’s dividend yield of 5.9% should re-rate if the group’s top line and margins improve under a stable capex outlook.

Meanwhile, Berenberg more modestly increased its price target for Vodafone to 259p from 250p in a pretty cautious review of the UK telecoms and broadband sector.

The German broker also maintained its ‘buy’ rating on Vodafone which remains its favoured UK telco.

Mon, 12 Jun 2017 10:58:00 +0100
<![CDATA[News - Vodafone signs partner market agreement with South Korea's LG Uplug ]]> Vodafone (LON:VOD) has joined forces with telecommunications company LG Uplug Corp. to tap into South Korea's market as the group tries to turn around business in Asia where its India division has been hit by fierce competition.

Under a partner market agreement, Vodafone will support the consumer and enterprise operations of South Korea's LG Uplus, helping with strategy and development in the nation to boost customer numbers.

Together, they will offer communications and enterprise services to multinational companies.

"Our new partnership will enable LG Uplus to benefit from Vodafone expertise and experience, in addition to access to our global enterprise products and services,” said Vodafone’s Partner Markets chief executive Digo Massidda.

“I am delighted that LG Uplus has joined our partner market network and I look forward to building on our relationship in the coming years."

The agreement marks Vodafone’s first venture into South Korea and comes about three weeks after the group reported a wider full year loss. Vodafone's loss for the year to 31 March expanded to €6.1bn from €5.1bn a year ago due to an impairment charge for its troubled India business.

Vodafone hopes to revive its India division as it merges the business with Idea Cellular in an effort to tackle fierce competition in the country.

Mon, 05 Jun 2017 07:29:00 +0100
<![CDATA[News - No plain sailing ahead for Vodafone, says Barclays ]]> Rising competition ahead has led scribes at Barclays to downgrade Vodafone plc (LON:VOD)  to 'equal weight' from 'overweight'.

It comes on the week the group posted full year results, in which it sounded an upbeat note on prospects, despite posting  a £5.2bn annual loss due to a writedown of its Indian operations, while revenue fell 4.4% to €47.6bn, in part due to foreign exchange headwinds and regulatory headwinds in Europe.

Vodafone said it saw organic adjusted core earnings growth of between 4% and 8% in fiscal year 2018, boosted by stabilising average revenue from its contract customers and lower spending.

Free cash flow (FCF) is expected to reach €5bn from €4.1bn in fiscal year 2017 and €1.2bn the year before.

Barclays notes that the group's valuation looks 'broadly up with events', but that FCF growth beyond 2018 will likely be tempered by rising competitive intensity.

Vodafone shares nudged 0.27% higher at 220.75p.

Fri, 19 May 2017 09:50:00 +0100
<![CDATA[News - Vodafone shares gain as it reports wider full year loss but points to growth in 2018 ]]> Vodafone Group plc (LON:VOD) widened its full year loss due to an impairment charge for its troubled India business but shares jumped as the telecoms company sounded a confident outlook.

Shares rose 3.97% to 219.55p in morning trading as the group said it expected a stronger performance in the current year after its India and UK divisions dragged on results last year.

Vodafone sees organic adjusted core earnings growth of between 4% and 8% in fiscal year 2018, boosted by stabilising average revenue from its contract customers and lower spending.

Free cash flow is anticipated to reach €5bn from €4.1bn in fiscal year 2017 and €1.2bn the year before.

Chief executive Vittorio Colao said Vodafone expects to “sustain our momentum in the coming financial year” as it merges its India business with Idea Cellular in an effort to tackle fierce competition in the country.

The merger is expected to be completed in the current fiscal year, subject to regulatory approval, and Colao believes the deal will “create a new champion for Digital India, while capturing synergies with an estimated net present value of US$10bn”.


Vodafone facing fresh competition in India with Jio...

However, analysts have warned that the entrance of mobile network operator, Jio, in India adds to the competitive pressures Vodafone is already facing.

“Most of Vodafone’s woes stem from India, where the entrance of Jio, a new network backed by Mukesh Ambani, India’s richest man, means competition in the Indian mobile market is far more intense than it could have imagined,” said George Salmon, senior analyst at Hargreaves Lansdown.

“Going forward, Vodafone India is to be de-consolidated and merged with Idea, so the struggling business will at least be at arm’s length in the future. “

Lower cash flows as a result of increased competition in India meant the compnay suffered a €3.7bn impairment charge, sending the group deeper into the red.

Full year loss widens, revenue falls... 

Vodafone's loss for the year to 31 March expanded to €6.1bn from €5.1bn a year ago.

Revenue fell 4.4% to €47.6bn, in part due to foreign exchange headwinds and regulatory headwinds in Europe, including cuts to roaming charges and mobile termination rates.

Organic service revenue growth slowed to 1.5% in the final quarter from 2.1% in the third, due to regulatory pressures but this is expected to ease in the year ahead.

The European business delivered 0.6% growth in annual organic service revenue on improved consumer and enterprise average revenue per user.

Revenue growth in Germany, Spain and Italy was offset by a decline in the UK where it was hit by a poor performance in mobile and fixed service revenues. Vodafone has been making improvements to its UK service through its Project Spring programme to turnaround the business. 

“The UK business is still suffering a nasty hangover from the mistakes made when implementing a new billing system 18 months ago, and there is the small matter of a €6.1bn loss on the bottom line,” Salmon said.

“However, at the operating level Vodafone is still in the black, and the European businesses are improving nicely.”

Excluding India, the Africa, Middle East and Asia Pacific division posted a 7.7% jump in organic service revenue, driven by mobile customer growth.


Vodafone hikes dividend...

The company raised its final dividend by 2.0% to 10.03 euro cents, bringing the total dividend for the year to 14.77 euro cents, a 2% increase.

 “Our confidence in the outlook is demonstrated by another 2% increase in our dividend,” Colao said.

Salmon said he thinks Vodafone has the “perennial problem of balancing fierce competition on tariffs with the punitive costs of acquiring spectrum and refreshing infrastructure, which are for the most part unavoidable”.

“As far as investors go, this has translated into a dicey balance between Vodafone’s free cash flow and the dividends it pays out to shareholders. Hopefully, coverage can improve in future.”

Russ Mould, investment director at AJ Bell, said the 2% increase in the total dividend "reaffirms Vodafone’s position in the elite group of 26 FTSE 100 firms to have increased their shareholder pay-out each and every year for the past decade".

However, Mould reckons the 5.5% dividend yield seems necessary to compensate investors for the modest underlying sales and profit increase in the full year and the company's weak long-term record of growing book, or net asset, value.

He added that dividend growth has slowed markedly and Vodafone’s 10-year compound annual growth rate is the third lowest among those to have managed this feat, including Intertek, Micro Focus International and Ashtead. 

“This suggests Vodafone has had to work ever harder to fund higher pay-outs so investors will be pleased to see a jump in free cash flow from €1.2bn to €4.1bn in the year just finished and CEO Vittorio Colao target €5bn for the year just begun."

Tue, 16 May 2017 07:41:00 +0100
<![CDATA[News - Vodafone grabs India's telecoms tiger by the tail in merging its operations with rival Idea Cellular ]]> The decision of Vodafone PLC (LON:VOD) to reduce its exposure to the fast-growing, but intensely competitive Indian telecoms market by merging its operations with those of Idea Cellular draws a line under a tricky situation for the global mobile phones giant.

More than 10 telecom operators are battling it out to try and attract India's one billion mobile phone users, forcing firms to keep tariffs low and significantly impacting their profitability.

The move to deconsolidate Vodafone India by creating the joint venture follows on from the launch last year of challenger operator Reliance Joi, which shook up the market by offering very competitive pricing plans and free data for the last six months.

In its last results, Vodafone took a €5bn write-down from “increased competition” in India, reflecting a 14% drop in data prices caused by Jio’s free promotional offers.

In a note today, Neil Wilson, senior market analyst at ETX Capital said: “The fact that Reliance Jio is to start charging for data from April 1st is good news for rivals (and Reliance shareholders), but even if it shows you can’t keep giving it away indefinitely, prices will remain very low and we can still expect its cheap deals to cause heavy losses for rivals.”

Revenues slowing …

Vodafone’s revenue growth from data browsing at its Indian division slowed from 16% in the second-quarter of 2016 to just 0.6% in the third-quarter because of the impact of free services from Jio – which is owned by the country's richest man, Mukesh Ambani.

The number of Vodafone India’s data users actually declined from almost 70 mln in 2016’s second quarter to 65 mln in the third quarter.

ETX’s Wilson said: “Cost synergies are the Vodafone-Idea deal’s big selling point. The companies think they can save US$2.1bn per year by 2022, four years after completion. Total synergies after integration costs are estimated at about US$10bn.

“Not bad value when you think Jio has spent more than twice that in six months giving away data in its bid to be the largest operator.”

Reversion focus …

Although there is some hope that those customers who took up Joi’s free offers as a second SIM but kept existing contracts will revert back to Vodafone and Idea, Wilson points out that the six months from April 1 will be “highly instructive.”

Undercutting rivals in such a competitive markets left few options but to cut costs through mergers, with Bharti Airtel - the country’s largest telecoms operator - having also recently agreed to buy Norwegian firm Telenor’s Indian arm.

Vodafone India’s ‘merger of equals’ with Idea will create the largest mobile operator in India, with around 400 million customers, overtaking Airtel, and making it four times the size of Jio.

After drifting lower at the start today, by late morning trading, Vodafone shares had edged 0.1%, or 0.2p higher to 211.6p.

Mon, 20 Mar 2017 11:08:00 +0000
<![CDATA[News - Vodafone confirms plans to create biggest telecoms player in India with merger of its business with Idea ]]> Vodafone PLC (LON:VOD) has confirmed plans to create the biggest player in India’s fast-growing mobile telecoms sector by agreeing around a US£23bn “merger of equals” of its Vodafone India unit with Aditya Birla Group's Idea Cellular.

Talks on a deal, which excludes Vodafone’s 42% stake in Indian telecoms infrastructure business Indus towers, were first confirmed at the end of January.

The merger will form the largest operator in India, with the combined company having nearly 400 mln customers, a 35% customer market share, and 41% revenue market share.

Vodafone will own 45.1% of the new combined company after transferring a stake of 4.9% to Aditya Birla group for around 39bn rupees, or around US579mln, in cash.

Adita Birla will then own 26.0% of the business, and will have the right to acquire more shares from Vodafone under an agreed mechanism intended to equalise their shareholding over time.

The implied enterprise value of the deal is 828bn rupees, or US$12.4bn for Vodafone India, and 722bn or US$10.8bn for Idea.

Vodafone India will be deconsolidated by Vodafone, and will be reported as a joint-venture after the deal closes.

Close next year …

The merger is expected to close during 2018, subject to approvals, and add to Vodafone's cash flow from its first full year following completion.

The two expect to be able to realise "substantial" cost and capital expenditure synergies, with an estimated value of around 670bn rupees, or US$10.0bn, and with estimated run rate savings of around 140bn rupees, or US$2.1bn on an annual basis by the fourth full year after completion.

Vodafone’s chief executive Vittorio Colao said: "The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies – such as mobile money services – that have the potential to transform daily life for every Indian.”

The move comes as Vodafone and Idea, currently the second and third largest players in India have had to fend off fierce competition from new market entrant Reliance Joi Infocom, which entered the market last year.

Airtel, the largest operator in the country, recently agreed to buy Norwegian firm Telenor’s Indian arm.

Vodafone booked a hefty  €5.0bn impairment on the Indian subsidiary last November hit by Joi’s aggressive pricing plans. The FTSE 100-listed firm had previously been considering a float of the Indian business.

Shares unmoved ...

In early trading, Vodafone shares drifted 0.1%, or 0.25p lower to 211.15p.

Neil Wilson, senior market analyst at ETX Capital said: “Shares are virtually unmoved on the announcement, rising just a shade as it expected and as investors wait for what’s expected to be a fairly downbeat set of annual results in May.”

But, he added: “A sensible move by Vodafone as it just doesn’t have the appetite to fight a long and bitter price war on its own. A unit that does little for free cash is better let go its own way for now.”

He added: “With (de)consolidation in India sorted, what now for Vodafone?

“Talk of a merger with US group Liberty Global has been doing the rounds for a while in the City and Vodafone CEO Vittorio Colao recently said the merits of such a tie-up remain undimmed.

“Given the appetite for deals at the moment, and the depressed value of sterling post-Brexit, there is a chance Vodafone and Liberty could jump into bed together.”

 -- Adds share price, broker comment --

Mon, 20 Mar 2017 07:33:00 +0000
<![CDATA[News - Vodafone undervalued - if it rids itself of Indian millstone ]]> On 30 January Vodafone Group PLC (LON:VOD) confirmed it was in discussions with the Aditya Birla Group about merging Vodafone India with Idea Cellular.

Any merger would create India’s largest telecommunications firm, and JP Morgan Cazenove thinks that not only is a deal imminent, but the attractions of the amalgamation are being heavily under-estimated.

Cazenove had published various reports over the last year arguing in favour of a merger, so it is little surprise that it gives the idea the thumbs-up.

It reckons that any merger would see Vodafone India deconsolidated from Vodafone’s accounts, reducing leverage by some €10bn (25%) and would refocus attention on to a rebounding European equity story.

In terms of free cash flow, it thinks hiving off Vodafone India would have no effect in the first year and would be positive thereafter as associate company dividends pour in.

“This  also  significantly  de-risks Vodafone’s returns profile by removing future Indian funding needs,” Cazenove argues.

The merger would also offer US$9bn of synergies “as well as market repair”.

By Caz’s calculations, Vodafone India’s enterprise value (EV) – the cost of acquiring the company adjusted for debt and cash – is 5.5 times annual underlying earnings (EBITDA); ratcheting this up to Idea’s multiple of 8.7 would imply €5bn of equity upside, which is equivalent to 8% of Vodafone’s market capitalisation.

If the merger does not happen, Caz expects management will recapitalise India, “removing the weight of costly local debt”, pushing up the broker’s earnings per share estimates by 5-10% a year.

Caz believes investors should be overweight Vodafone shares in their portfolio. Its sum of the parts-derived price target is 280p; Vodafone shares currently trade at around two quid.

Perversely, Jefferies has a less optimistic price target for Vodafone of 220p, but a more bullish ‘buy’ recommendation.

The broker has just trimmed its European Union revenue forecasts for the mobile phone networks operator, but sees an improving situation with regard to free cash flow (FCF).

“We model Headline FCF +€0.7bn y/y [year-on-year] in spite of -€0.5bn drag from India/Egypt,” Jefferies said.

Its view is that the shares are good value, despite its cautious view on India.

“On our (below consensus) forecasts, VOD trades on normalised Equity FCF yields of 8.4%/9.0% in Mar18/19, whilst offering a 6.3% divi yield that looks sustainable,” it said.

Tue, 21 Feb 2017 10:28:00 +0000
<![CDATA[News - Vodafone sees earnings at "lower end" of guidance due to intensifying competition in the UK and India ]]> Days after it unveiled plans to attempt to sort out its problematic Indian business, mobiles phones giant Vodafone PLC (LON:VOD) has said intensifying competition in that country, and in the UK, means its full year earnings will be at the "lower end" of guidance.

In its latest trading update, the FTSE 100-listed group reported a 1.7% increase in overall organic service revenue for its third quarter.

But in the UK, Vodafone said its service revenues fell 3.2%, while in India they were down 1.9%

READ: Vodafone looks to tackle Indian tiger …

Vittorio Colao, Group Chief Executive, commented: "Our overall performance in Europe and Africa remained strong during the third quarter, reflecting good execution.”

But, he added: “In the UK we have made good progress in improving customer service but face heightened price competition in Enterprise.”

And the Vodafone boss said: “We anticipate intense competitive pressure in India in the fourth quarter and are taking a series of commercial actions, including the extension of 4G services to 17 leading circles.”

On Monday, Vodafone revealed that it is  in talks to merge its Indian subsidiary with local rival Idea Cellular in an all-share deal to create a market leader better able to take on new entrant Reliance Jio.

The company confirmed its full-year guidance for free cashflow of at least €4bn but said it now expected its underlying earnings (EBITDA) to come in at the lower end of a range for growth of 3% to 6%.

Colao concluded: “We are reconfirming our guidance for the year and are confident that we will sustain our commercial momentum."

In reaction to the weak update, Vodafone shares dropped over 3%, or 6.40p to 187.95p in early trading.

Analysts at Haitong Research said: “We think our and consensus forecasts will likely inch down after today.”

In a note to clients, reiterating a ‘neutral’ stance on Vodafone shares, they added: “We remain cautious about VOD’s prospects, at the current share price level”.

 -- Adds share price, broker comment --

Thu, 02 Feb 2017 08:04:00 +0000
<![CDATA[News - Vodafone looks to tackle its Indian tiger as it reveals merger talks with Ideal Cellular ]]> Shares in Vodafone PLC (LON:VOD) topped the FTSE100 leader board today after the mobile phones giant revealed it is in talks to merge its problematic Indian operations with rival Ideal Cellular.

In a short statement, Vodafone said it was in talks with Ideal’s owner, Indian conglomerate Aditya Birla about an all-share deal that could help the two groups counter fierce competition in the country’s mobile market.

The UK firm said any merger would involve issuing new shares in Ideal to Vodafone and would result in Vodafone deconsolidating Vodafone India.

It added that any deal would exclude the 42% stake held by Vodafone in Indus Towers.

But, Vodafone said:  “There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction.”

In early trading, Vodafone shares were up over 3%, or 6.25p at 199.60p.

Indian tiger taming …

Neil Wilson, senior market analyst at ETX Capital, said: “We have no more details than that but it seems Vodafone is taking the Indian tiger by the scruff.”

He added:  “India has become a trouble-spot for Vodafone, with losses there severely hurting the rest of the group. Vodafone recently posted a whopping €5bn write-down from  ‘increased competition’ in India. This was down to a 14% drop in data prices, caused by free promotional offers from Reliance Jio as it shakes up the market by offering almost free data.

“Indeed a vicious price war in India means the group could post its first operating loss in ten years in 2017.”

Wilson said: “The Idea tie-up looks like a way to limit the casualties on either side. A merger could help the combined group maintain higher prices and take on the likes of Reliance Jio. Something had to be done and this merger might be the way to strengthen Vodafone’s hand in the Indian price war.”

Government clashes …

Europe's largest mobile phone operator was said last year to be preparing an initial public offering of its India unit,  but was understood to have shelved the move amid concerns over  the aggressive entry of new player Reliance Jio into the market.

Vodafone has also repeatedly clashed with the Indian government since it paid US$11bn for a 67% stake in Hutchison Whampoa’s mobile phone business in 2007.

Last year, India warned Vodafone it may seize the telecoms giant’s assets in the country if it does not pay a disputed 142bn rupee (£1.5bn) tax bill.

In 2012 India’s Supreme Court ruled that Vodafone was not liable for payment of any tax on the acquisition but the government then changed the law later that year to enable it to tax such deals retrospectively, demanding more than $2bn be paid on the deal.

In 2014 Vodafone then sought international arbitration of the dispute, which has still not been settled.

The UK firm has offloaded a number of overseas businesses in the past year, merging itsoperations in New Zealand with Sky PLC (LON:SKY), and merging its business in the Netherlands with  Liberty Global PLC (NASDAQ:LBTYA).

Mon, 30 Jan 2017 09:02:00 +0000
<![CDATA[News - Vodafone Dutch JV with Liberty Global up and running ]]> Liberty Global PLC (NASDAQ:LBTYA) and Vodafone Group PLC (LON:VOD) have completed the transaction to combine their Dutch operations to form a 50:50 joint venture (JV).

The JV, called VodafoneZiggo, will operate under both the Vodafone and Ziggo brands.

The combined entity has revenue of more than €4bn.

In total, the joint operation will have around ten million fixed and five million mobile account holders.

Following the recapitalisation of VodafoneZiggo, and after taking into account the €0.8 billion equalisation payment by Vodafone, Liberty Global will receive €2.2 billion and Vodafone will receive €0.6 billion in cash payments.

“This is a highly accretive transaction with significant synergies and a predictable dividend stream. When including over €500 million of cash generated and up-streamed since the announcement of the deal back in February, total proceeds to Liberty will exceed €2.7 billion,” said Mike Fries, chief executive officer of Liberty Global.

Vittorio Colao, Vodafone’s group chief executive, said the merged operation will be a stronger competitor in the Netherlands, which is one of Vodafone’s core markets.

Tue, 03 Jan 2017 07:34:00 +0000
<![CDATA[News - Britain has “too many digital deserts", with the country 54th in the world for 4G ]]> Britain has “too many digital deserts and partial not spots”, a government-appointed commission has found, with the country 54th in the world for 4G.

With coverage of just 53% – the amount of time the average user has access to 4G – the UK network is worse than Romania and Albania, Panama and Peru, according to the National Infrastructure Commission (NIC) report. 

The NIC said the market was failing consumers, and it urged ministers to stop Britain falling further behind as the mobile industry moves on to super-fast 5G technology – the fifth generation of mobile internet networks.

Former Labour Cabinet minister Lord Adonis, who led the review, said that although Britain was “languishing in the digital slow lane”, the roll-out of 5G technology was an opportunity for the Government to “start again and get ahead”.

He noted that “the typical user can access 4G barely half the time.”

He added: “Our roads and railways can feel like digital deserts and even our city centres are plagued by not spots where connectivity is impossible.

“That isn’t just frustrating, it is increasingly holding British business back as more and more of our economy requires a connected workforce.”

The NIC report recommended that the UK government and Ofcom should develop a “meaningful set of metrics that represent the coverage people actually receive and use these to determine a mobile universal service obligation so that consumers can access essential services where they are needed.”

It added that this should be delivered “as a soon as is practical but no later than 2025.”

Wed, 14 Dec 2016 08:56:00 +0000
<![CDATA[News - Vodafone dialling up the gains in Europe, says Deutsche ]]> Deutsche Bank repeated a 'buy' on telecoms giant Vodafone plc (LON:VOD), saying its profits and growth in Europe continue to improve.

Organic service revenue growth continues to improve at the group level in Europe despite some weakness in Africa, Middle East and Asia Pacific and a full quarter drag of EC (European commission) roaming charge regulations.

Underlying data price trends continue to improve in Europe, while a recovering handset cycle may assist growth in the scond half, says the broker.

Earlier this month, first-half results from the world’s second-largest mobile operator beat City hopes.

Italy and Germany were at the vanguard as the mobile titan weighed in with earnings before interest tax and depreciation of €7.9bn, up 4% on a year ago and €100mln ahead of analysts’ consensus forecasts.

Deutsche analyst Robert Grindle noted that as European mobile returns to growth, he expected a kicker to operating leverage with upside risk to profits in Europe even if trading in Asia and the Middle, East and beyond gets tougher.

Deutsche cuts the target price on VOD 15p to 295p due to foreign exchange. 

Wed, 23 Nov 2016 11:11:00 +0000
<![CDATA[News - Is Vodafone/Liberty Global deal off the table? ]]> A City brokerage believes there is little near-term prospect of a deal between Vodafone (LON:VOD) and the American giant Liberty global - a possibility certain investors and traders have factored into their buying assumptions.

Instead, the house reckons the stock will remain range-bound, while the business faces the threat of a financially draining price war flaring up in Europe once again.

City newcomer Haitong Research gives four major reasons why the long-mooted Liberty deal is off the table leading with this: “[The] chief executive said so again at a conference last week.”

That would appear pretty conclusive, then.

But warming to his theme, analyst John Karidis said: “Liberty believes it does not need M&A to keep growing its value apace in the next three years (this will be by extending its cable networks and by holding down fixed costs). 

“[It] says it may buy mobile networks only if they are cheaply priced and where Liberty’s cable footprint covers much of the national market. Lastly, it regards its asset in Germany as a ‘crown jewel’ so this is not for sale.”

Staying cautious he rates the stock ‘hold’ with a fair value of 220p a share. 

Tue, 22 Nov 2016 10:41:00 +0000
<![CDATA[News - Vodafone dials higher as first half results beat ]]> Shares in Vodafone (LON:VOD) were higher in early trade as first-half results from the world’s second-largest mobile operator beat City hopes.

Italy and Germany were at the vanguard as Voda weighed in with earnings before interest tax and depreciation of €7.9bn, up 4% on a year ago and €100mln ahead of analysts’ consensus forecasts.

That said, the company guided the market down a little in so far as the full-year outcome is concerned. The top of the range comes back to €100mln to €16.1bn, with a lower end figure of €15.7bn.

“Overall, we expect to sustain our underlying performance in the second half of the year and remain on track to meet our full-year objectives despite macroeconomic uncertainties,” said chief executive Vittorio Colao.

“This performance allows for improved returns to our shareholders, as reflected by the growth in the interim dividend.”

The payout grew almost 2% to 4.74 cents.

At 8.40am the shares were changing hands for 208.55p, representing a rise of 2%.

Of the 15 analysts logged by the Broker Forecasts site as following Vodafone, 11 are buyers of the stock. The remainder are ‘neutral’ on the stock.

The consensus price target is 255p, down from 263p six months ago, but significantly ahead of the current market valuation.

Tue, 15 Nov 2016 08:56:00 +0000
<![CDATA[News - Vodafone fined £4.6mln after pay-as-you-go blunder ]]> The mobile phone firm phone firm Vodafone PLC (LON:VOD) has been fined by the UK regulator Ofcom for “serious and sustained breaches of consumer protection rules”.

The financial sanction, at £4.6mln, is unlikely to rank as anything more than a flea bite for a company a company that turned over £41bn last year.

Ofcom found Voda charged certain pay-as-you-go customers for top-up credit but failed to carry out credit their accounts.

It also said the company had broke rules on handling customer complaints.

The findings and the fines emanated from two earlier investigations of the group, which has 20mln British customers.

The first concluded that 10,452 pay-as-you-go customers were affected when Vodafone omitted to top up their accounts.

The watchdog said it "failed to act quickly enough to identify or address these problems", which were IT-related.

The second Ofcom probe concluded customer service agents were not given clear guidance on what constituted a complaint from a user.

Vodafone offered its “profound apologies”.

Wed, 26 Oct 2016 09:53:00 +0100