There is a fair argument that life for Vodafone in Europe will get easier after the last quarter's hefty declines in service revenues
Vodafone's numbers, especially in Europe, still look horrible but the shares continue to do well. Has the market, assessing prospects in a post-Verizon Wireless world, over-dosed on chief executive Vittorio Colao's optimism?
Probably not. There is a fair argument that life for Vodafone in Europe will get easier after the last quarter's hefty declines in service revenues (Germany down 7.9%; Italy 16.6%; UK 5.1%; Spain 14.1%). For a start, the regulatory bite, in the form of cuts to mobile termination rates, won't intensify. Then there's Project Spring, Vodafone's £7bn splurge of extra investment to upgrade networks.
The spending is necessary – Vodafone has been off the pace in driving new 4G technology – but this also looks to be a good moment to hit the accelerator. 4G customers are said to consume twice as much data as 3G punters. And Vodafone's major rivals do not have the equivalent of a large cheque from Verizon in their back pockets (remember, Vodafone is handing shareholders only 70% of the proceeds of the sale of the 45% stake).
That is not to suggest the turnaround in revenues will arrive quickly. Italy and Spain are still rough markets and the competition in Germany will not stand still. But Vodafone's management now has time to breathe and capital to invest. The post-Verizon share consolidation will halve the dividend bill at a stroke, removing the annual struggle to cover the payment from non-Verizon earnings.
There remains an outside risk that Colao will over-pay for somebody's cable business. On the other hand, shareholders know there is also a chance that AT&T of the US or Softbank of Japan will offer a princely price for Vodafone itself. When the dividend yield is 5%, those odds are not so bad. Reported by guardian.co.uk 6 hours ago.
Vodafone's numbers, especially in Europe, still look horrible but the shares continue to do well. Has the market, assessing prospects in a post-Verizon Wireless world, over-dosed on chief executive Vittorio Colao's optimism?
Probably not. There is a fair argument that life for Vodafone in Europe will get easier after the last quarter's hefty declines in service revenues (Germany down 7.9%; Italy 16.6%; UK 5.1%; Spain 14.1%). For a start, the regulatory bite, in the form of cuts to mobile termination rates, won't intensify. Then there's Project Spring, Vodafone's £7bn splurge of extra investment to upgrade networks.
The spending is necessary – Vodafone has been off the pace in driving new 4G technology – but this also looks to be a good moment to hit the accelerator. 4G customers are said to consume twice as much data as 3G punters. And Vodafone's major rivals do not have the equivalent of a large cheque from Verizon in their back pockets (remember, Vodafone is handing shareholders only 70% of the proceeds of the sale of the 45% stake).
That is not to suggest the turnaround in revenues will arrive quickly. Italy and Spain are still rough markets and the competition in Germany will not stand still. But Vodafone's management now has time to breathe and capital to invest. The post-Verizon share consolidation will halve the dividend bill at a stroke, removing the annual struggle to cover the payment from non-Verizon earnings.
There remains an outside risk that Colao will over-pay for somebody's cable business. On the other hand, shareholders know there is also a chance that AT&T of the US or Softbank of Japan will offer a princely price for Vodafone itself. When the dividend yield is 5%, those odds are not so bad. Reported by guardian.co.uk 6 hours ago.