Vodafone Share Price Continues Bullish Run

Vodafone Share Price Continues Bullish Run

CMC Markets  | Nov 11, 2019 07:14

Vodafone’s share price jumped in late July after the group announced plans to sell-off the European mobile mast business via a stock market floatation, which could raise as much as €20 billion.

The group aims to spin off the unit in the first half of 2020. Vivek Badrinath, the head of Vodafone’s rest of the world division, has been named as CEO of Tower Co – the new company.

Vodafone (LON:VOD) plans to pay down debt

The cash raised from the planned disposal will be used to pay down Vodafone’s debt. The telecoms giant racked up debt due to the acquisition of Liberty Global’s cable network in central and eastern Europe. Heavy investment in 5G in Italy as well as Germany also added to the firm’s liabilities. Long-term debt is in excess €48 billion.

Vodafone (LON:VOD) revealed a tie-up with Telecom Italia (MI:TLIT) Group in relation to 4G and 5G. The network sharing partnership is mutually beneficial as it should deliver faster 5G, at a lower expense, over a larger area. The move should equate to cashflow gains of at least €800 million over the decade.

Vodafone share price hit by dividend cut

In May, the company cut its dividend for the first time, as a way of addressing the debt situation. As expected, the announcement put pressure on the Vodafone (LON:VOD) share price. It’s never a good look when a group has to lower its returns to investors as it shows weakness, but nonetheless, it was a prudent step. Over the years too many companies have tried to keep the market sweet by maintaining a dividend, but failed to address debts which were building up at the same time.

In July, BT suggested it was considering cutting its dividend to assist with the costs of expanding the fibre optic network in the UK. This despite the group maintaining its full-year dividend when it revealed its annual numbers two months ago. BT also said it is exploring other options like cost-cutting as well as increasing borrowing.

Heavy investment weighs on industry

The sector as a whole seems to be suffering under the weight of such heavy investment, and the tough competition is keeping margins under pressure. Consumers are savvier these theses as there is evidence that people are lowering their outgoings, and price comparison sites are making it easier to scout out deals.

BT’s share price (LON:BT) took a knock last week after Virgin Media announced it was dropping its BT contract for a Vodafone (LON:VOD) agreement. The contract will run for five years and it will provide 5G as well as other services to 3 million clients. Oddly the news had little impact on Vodafone’s share price, but seeing as Vodafone pipped BT for the contract, it suggests the group is doing something right.

Vodafone’s share price could be volatile this week as the company releases its first-half numbers on Tuesday.

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original Post

CMC Markets

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.