Vodafone Group PLC

Vodafone Group Plc (LON: VOD) is a prominent leader in technology communications, with fixed, broadband, mobile and TV network. It’s headquarter is based in the United Kingdom. It provides a range of services including mobile communication, fixed communication, unified communication, internet of things (IoT), cloud hosting and security & carrier services. The company is mainly operating in two geographies, AMAP (Africa, the Middle East and the Asia Pacific) and Europe which comprise of 24 countries. As per the latest data on 30 September 2019, Vodafone has around 27 million fixed broadband clients, 22 million TV clients, and 625 million mobile clients, comprising all of the clients in the company’s joint ventures and associates.

On 5^th February 2020, the company will announce the trading statement for the quarter ended December 31, 2019.

Many of the world’s best-known companies, including Vodafone Group, utilize technology innovations including the Internet of things, artificial intelligence, 5G communication, and data centres.

Recent News
On 19th December 2019,Vodafone Group announced the signing of an agreement with Monaco Telecom (Monaco Telecom SAM) to sell 100 per cent of VFML (Vodafone Malta). Monaco Telecom will acquire VFML for a cash consideration of €250 million.

Financial Highlights (for the six months ended 30 September 2019, €million)

(Source: Interim Reports, Company Website)

For the first half of the financial year 2020, the company’s reported revenue increased by 0.4 per cent to €21.9 billionas compared with the corresponding period of the last year, due to the benefits derived from the acquisition of Liberty Global's assets in Central & Eastern Europe and Germany. Group’s service revenue surged by 1.5 per cent to €18.5 billion in H1 FY20 against the €18.3 billion in H1 FY19, while organic adjusted EBITDA was up by 1.4 per cent. The LAT (loss after-tax) for the H1 FY2020 period stood at €1.9 billion. Basic loss per share was reported at 7.24 Eurocents in H1 FY20 versus 28.89 Eurocents in H1 FY19, while adjusted earnings per share stood at 0.85 Eurocents in H1 FY20. The board of the group had announced an interim dividend of 4.50 Eurocents per share. On 30the September 2019, the net debt stood at €48.1 billion.  

Share Price Performance

Daily Chart as at January-10-20, before the market closed (Source: Thomson Reuters)

On 10th January 2020, Vodafone Group PLC shares were trading at GBX 152.34 at the time of writing before the market close (at 8:15 AM GMT), up by 0.25% against the previous day closing price. Stock's 52 weeks High and Low are GBX 169.46/GBX 122.22. The company's stock beta stood at 1.11, reflecting the higher volatility as compared to the benchmark index.

Growth Prospects
The company has also acquired a Liberty Global business in Germany. In FY2020, the company is expecting between €14.8- €15 billion of adjusted EBITDA, reflecting lower single-digit organic growth and free cash flow of approximately €5.4 billion. Pro-forma financial leverage, excluding the INWIT transaction, is anticipated to be around 3.0x at the year-end and the intention to decrease the leverage towards the lower end of the 2.5x-3.0x range within the next few years.

Conclusion
On 4^th December 2019, the company announced that they are collaborating with Amazon Web Services (AWS).From this, the developers can simply develop innovative applications on the Amazon Web Services API and operate them from the 5G network node closest to their end-users.  In most of the major European markets, the company has now secured network sharing agreements. The company released a key long-term wholesale collaboration with Virgin Media in the United Kingdom, in order to enhance the use of the network assets. In May 2020, the company anticipate the European Tower Co to be operational and continue to unlock the substantial value implanted in the tower infrastructure.

The upgrade to the 5G network will cost billions in spectrum and deployment across all of Vodafone’s markets.The digital transformation is already generating a healthier experience for the clients, enhancing the differentiation, supporting growth and at the same time decreasing the structural costs.

Therefore, based on the current trend in the stock, industry and company’s growth prospects and with reduced balance sheet risks, we have given a "Hold" recommendation at the closing price of GBX 151.96 (as on 9^th January 2020).

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