Vodafone (VOD) share: What to expect amid influx of activist investors?

FTSE100 listed telecom service provider, Vodafone Group Plc (LON: VOD) which has operations in over 22 countries, has recently been on target of activist investors. As per media reports, Coast Capital LLC is the latest activist investor to buy a stake in Vodafone Plc. In January 2022, Swedish investment firm Cevian Capital has reportedly brought a stake in the telecom operator.

In recent years, the company’s stock has underperformed and faced negative investor sentiments amid slow business growth and overpriced acquisitions like the £16 billion acquisition of Liberty Global’s business in Germany.

The company plans to work along with activist investors to revive business growth. Cevian Capital is already working with the company’s management to boost business performance. The company’s plans are to restructure its global enterprise division, codenamed Project Galaxy.

Project Galaxy

As part of the reorganisation, the company plans to overhaul its global enterprise division, which provides telecom and IT services to top companies across the globe. The company plans to give more control and independence to the local country office. At present, all international client deals and contracts are handled by the UK and European Union. However, in the future, all overseas contracts will be managed locally, which would help the company to provide more responsive and timely support to businesses.

As per the industry experts, business operation shift to the country level instead of the central hub would result in attracting new investment and help in a swift spin-off of business. Also, it will make it easier to deal with other companies with less regulatory intervention.

Vodafone’s Q3 earnings

In the third quarter of FY22, the company reported total revenue of €11,684 million, up by 4.3% compared to last year. The group’s service revenue improved with growth in Europe and African markets. Also, the company has reiterated and is on track to meet its FY22 guidance of adjusted EBITDAaL of €15.2 - €15.4 billion and adjusted free cash flow of not less than €5.3 billion.

Recent stock acquisitions by activist investors may push the management to shore up their business prospects, which can lead to improvement in revenue and profitability in upcoming quarters.

Vodafone Plc stock performance

(Image Source: Refinitiv)

The company’s stock currently trades at GBX 137.98, up by 0.42% on 08 February 2022 at 08:10 am GMT+1, with a market cap of £37,155 million. Its current dividend yield stands at 5.4% as of today. The stock has given a 22.9% year-to-date return to its shareholders.