Vodafone Group Plc

Vodafone Group Plc (LON: VOD) is a telecommunication company, headquartered 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.

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 – H1 Financial Year 2020 (30 September 2019, €, million)

(Source: Interim Reports, Company Website)

In the first half of the financial year 2020, the company’s reported revenue surged by 0.4 per cent to €21.9 billion as 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 revenuesurged 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 euro cents in H1 FY20 versus 28.89 euro cents in H1 FY19, while adjusted earnings per share stood at 0.85 euro cents in H1 FY20.

Share Price Performance

Daily Chart as at 24^th December 2019, before the market close (Source: Thomson Reuters)

On 24^th December 2019, Vodafone Group Plc shares were trading at GBX 149.54 at the time of writing before the market close (at 8:57 AM GMT), down by 0.58 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 169.46/GBX 122.22.The company’s stock has given investors 20.36 per cent of a positive return in the last six months. The company’s stock has given investors 6.57 per cent of a negative return in the last three months.

Conclusion
The upgrade to 5G network will cost billions in spectrum and deployment across all of Vodafone’s markets. 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. 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.

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.

Therefore, based on the current trend in the stock and with reduced balance sheet risks, we have given a "Hold" recommendation at the current price of GBX 149.00 (as on 24^th December 2019, before the market close at 8:05 AM GMT).

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