Vodafone Sales Hurt by Falling Pound

Equity analysts are pleased to see that Vodafone's second-quarter results are generally stronger than those of the first quarter, despite some weak areas

Allan C. Nichols, CFA 15 November, 2016 | 4:43PM
Facebook Twitter LinkedIn

Vodafone (VOD) reported fiscal first-half results that continue to be hurt by negative currency moves. The firm’s reported revenue fell 3.9% year over year, versus our full-year projection of a 4.4% gain. However, group service revenue grew 2.3% on an organic basis. We believe this is the more relevant figure, and we don’t expect any significant changes to our fair value estimate. We are pleased to see that the second-quarter results are generally stronger than those of the first quarter, supporting management’s claims that Vodafone is benefiting from “Project Spring”.

While the U.K. is Vodafone’s home market, it accounts for only 13.2% of its revenue

In Europe, organic revenue service grew 0.6% as the firm increased its 4G subscriber base by 61.7% to 39.3 million and its fixed broadband base by 10.2% to 12.9 million. This growth is important, as 4G customers tend to use significantly more data than 3G users. The increase in 4G customers allowed average revenue per user to stabilise, and we expect it to increase over time. For the firm as a whole, 28% of broadband customers are now on converged services, significantly reducing churn and increasing the value of the subscriber.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Vodafone Group PLC109.62 GBP0.00Rating

About Author

Allan C. Nichols, CFA  is a senior stock analyst and international investing specialist with Morningstar.