Fundamental Insights About The Vodafone Group (VOD) Plc

  • May 08, 2019 BST
  • Team Kalkine
Fundamental Insights About The Vodafone Group (VOD) Plc

Vodafone Group

Vodafone Group PLC (VOD) is a London, United Kingdom-based telecommunications group. Through subsidiary undertakings, joint ventures, associated undertakings and investments, the group has a significant presence in Europe, Asia Pacific, Africa and the Middle East. The group is amongst the world's leading telecommunications groups and has more than 500 million customers around the world. The company provides a wide range of services to both consumer and enterprise customers across 26 countries and fixed services in 17 of these. The group is an industry leader delivering in carrier services, security and IOT cloud to its enterprise customers, and also offers Mobile, Fixed and TV to its consumer customers. Gerard Kleisterlee is the Chairman of the Board, while Nick Read is the Chief Executive Officer.

Segments

The group’s operations are differentiated in two primary geographical segments: Europe and AMAP. Europe includes Germany, Italy, the UK and Spain, while AMAP largely includes developing and emerging countries that are in the process of rapid growth and industrialisation.

Trading Update – Q3 FY19

The company reported weak revenue numbers for Q3 FY19. The group’s revenue stood at €11 billion, down by €0.8 billion primarily on account of sale of Qatar, IFRS15 adoption and forex headwinds. Revenue from European region was down by 5.6 per cent, and revenue from ROW was down by 11.1 per cent.

Recent Developments

On 7th May 2019, the company, in an attempt to address European antitrust enforcers’ concerns, agreed to sell access to its cable broadband network to Telefónica Deutschland. The deal was made to address the regulator’s concern over for its €18bn deal with Liberty Global. The proposed consolidation, if approved, would be Vodafone’s largest acquisition since it bought Mannesmann in Germany in 2000 and would be the most significant consolidation in the European telecoms industry in more than a decade.

Key Financial Highlights (1H FY 2019, in €m)

(Company Filings)

Revenue in the first half declined by 5.5% to €21.8 billion, while service revenue dropped to €19.7 billion. Group adjusted EBITDA rose to €7.07 billion, reflecting an increase of 2.9% (organic basis), while adjusted EBITDA margin improved to 30.8%, increasing by 0.3 percentage points. The company’s reported operating loss stood at €2.1 billion. In H1 FY19, the group reported total loss of €7.8 billion. Driven by lower adjusted EBIT and higher net financing costs, adjusted earnings per share were 3.56 euro cents per share and declined by 43.7% year-on-year, while basic loss per share was 29 euro cents, in comparison to basic EPS of 4.03 euro cents reported last year.

Share Price Commentary

 Daily Chart as at May-08-19, before the market closed (Source: Thomson Reuters) 

On 8th May 2019, at the time of writing (before the market closed, at GMT 09:10 am), VOD shares were trading at GBX 139.75, down by 0.17 per cent against its previous day closing price. Stock's 52 weeks High and Low is GBX 212.6/GBX 131.00. The company's stock beta was 1.25, reflecting more volatility as compared to the benchmark index. The outstanding market capitalisation was around £37.62 billion with a dividend yield of 9.51 per cent.

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