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Vodafone Jumps as Return to Growth Eases Pressure on CEO
Vodafone’s Return to Growth Eases Pressure on CEO
12 Nov 2019, 07:15 PM IST
(Bloomberg) --
Vodafone Group Plc returned to sales growth in the second quarter as its toughest European market of Spain showed signs of improvement, in a boost for Chief Executive Officer Nick Read. Its shares rose as much as 3.2%
- Organic service revenue grew 0.7%, above the 0.2% forecast by analysts. It follows two quarters of declines. Vodafone also upgraded its full-year earnings guidance.
Key Insights
- Read needs some decent sales growth to generate cash for network investments and service debts built up with Vodafone’s purchase of Liberty Global Plc assets.
- South Africa, Italy and Spain all improved as Vodafone faced tough competition from former phone monopolies and no-frills challengers. The company said it had the best ever quarter for new customers in the U.K.
- Read said he expects to build upon the revenue growth in the second half of the year in both Europe and Africa.
- The company toned down its guidance on full-year free cashflow, while boosting its forecast for earnings after the Liberty Global deal.
Market Reaction
- Vodafone shares were up 2.5% as of 8:30 a.m. in London. The stock has risen 14% in the past year, outpacing a 5% rise in the Stoxx 600 Telecommunications Index, as investors welcomed Read’s plans to collaborate more with rivals on infrastructure to cut costs.
- NOTE: Vodafone CEO’s Wild First Year Leaves Stock Where It Started
- On Monday, 17 analysts surveyed by Bloomberg rated the stock a buy, six hold and two sell.
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- The company made a loss in its Indian business after a court ordered it to pay a spectrum fee. It now sees group free cash flow of “around” 5.4 billion euros versus previous guidance of “at least” 5.4 billion.
- Vodafone sees adjusted earnings before interest, tax, depreciation and amortization of 14.8 billion euros to 15 billion euros, up from its previous guidance of 13.8 billion to 14.2 billion.
- Company statement
- NOTE: BT Drops as Liberty Global Switches to Vodafone for Mobile
To contact the reporter on this story: Thomas Seal in London at tseal@bloomberg.net
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer
©2019 Bloomberg L.P.
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