LONDON BRIEFING: Vodafone Evaluates Stock Listing Of Towers Business

(Alliance News) - Vodafone on Friday reported improving organic service revenue trends and said ...

Alliance News 26 July, 2019 | 8:06AM
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(Alliance News) - Vodafone on Friday reported improving organic service revenue trends and said that it will legally separate its European tower infrastructure business into a new organisation, which will be operational by May 2020.

The company said first quarter organic service revenue fell 0.2%, which the company pointed out was an improvement on the 0.7% fall seen in the fourth quarter.

Revenue for the quarter ended June 30 was down 2.3% to EUR10.65 billion, with Europe down 2.1% and Rest of the World down 4.0%.

Trading in the first three months of the financial year was in line with expectations, allowing the company to back previous guidance.

"Our service revenue growth improved during the first quarter, led by Italy, and mobile churn fell to another record low. Following a significant quarter of commercial activity, we expect the gradual recovery in our service revenues to continue, underpinning our financial outlook for the year," said Chief Executive Nick Read.

Vodafone said it will either seek stock listing, or disposal of minority stake, for the European tower infrastructure business, depending upon market conditions. Proceeds will be applied toward reducing Vodafone's debts. The towers business comprises of 61,700 towers in 10 markets with potential adjusted earnings of around EUR900 million.

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 3.13 points at 7,492.18
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Hang Seng: down 0.5% at 28,455.69
Nikkei 225: closed down 0.5% at 21,658.15
DJIA: closed down 0.5% at 27,140.98
S&P 500: closed down 0.5% at 3,003.67
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GBP: down at USD1.2430 (USD1.2488)
EUR: down at USD1.1140 (USD1.1158)

Gold: down at USD1,416.80 per ounce (USD1,418.12)
Oil (Brent): firm at USD63.56 a barrel (USD63.89)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come

1100 BST Ireland Retail Sales Index

0800 CEST Germany Foreign trade price indices
0845 CEST France PPI
0845 CEST France Consumer confidence survey
1000 CEST Italy Consumer Confidence Survey
1000 CEST Italy Business Confidence Survey

0830 EDT US Advance estimate GDP
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New UK Prime Minister Boris Johnson is making a series of further appointments to his government after dramatically reshaping the Cabinet. The prime minister is using the reshuffle at Minister of State level to promote allies and clear out MPs who oppose his stance on Brexit. But ardent Brexiteer Steve Baker said he had turned down a job in Johnson's new government. The first changes announced included Nigel Adams, who returns to government after resigning over May's Brexit tactics. Lucy Frazer moves from Solicitor General to the Ministry of Justice. Kit Malthouse, who was Johnson's deputy mayor for policing during their time in London's City Hall, has become a Home Office minister. Conor Burns has been appointed a minister at the Department for International Trade. Nick Gibb retains his role at the Department for Education and Jesse Norman stays as Financial Secretary to the Treasury. But ministers on the way out include Stephen Hammond, a prominent opponent of a no-deal Brexit. John Penrose said he was leaving his post in the Northern Ireland Office but would keep his role as the prime minister's anti-corruption champion.
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The US Treasury Department on Thursday announced sanctions against three of Venezuelan President Nicolas Maduro's stepsons, a Colombian businessman and six others for running a "corruption network" that profited from emergency food imports. The US has in recent months escalated sanctions against Venezuela, which is struggling with a political and economic crisis that the United Nations says has left a quarter of its 30 million people in need of humanitarian aid. The new restrictions target Maduro's stepsons Walter Jacob Gavidia Flores, Yosser Daniel Gavidia and Yoswal Alexander Gavidia Flores, whom the US says collaborated with Colombian businessman Alex Nain Saab Moran and his business partner Alvaro Pulido to profit off importing emergency food into the country as it struggled with rising malnutrition.
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BROKER RATING CHANGES
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JEFFERIES RAISES BERKELEY GROUP TO 'BUY' ('HOLD') - TARGET 4391 (3862) PENCE

SOCGEN CUTS EASYJET TO 'SELL' (HOLD) - PRICE TARGET 1000 (1200) PENCE
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COMPANIES - FTSE 100
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Educational publisher Pearson reported underlying sales growth in the first half of the year and backed its annual guidance. Underlying revenue was up 2% for the six months to June 30, with North American up 1%, Core up 6% and Growth up 2%. Revenue was GBP1.83 billion for the half, down slightly from GBP1.87 billion a year ago. Pretax profit dropped sharply to GBP13 million from GBP202 million, largely because the company saw a net gain of GBP207 million in the first half of 2018, and only GBP6 million in the first six months of 2019. Continued momentum in "structural growth opportunities" and stabilisation in other parts of the business more than offsets expected declines in US Higher Education Courseware and US Student Assessment. Pearson raised its interim dividend to 6p from 5.5p. Pearson said its annual guidance remains unchanged, expecting an adjusted operating profit of between GBP590 million to GBP640 million.
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Rightmove said revenue rose in the first half of the year, as it separately agreed to buy Van Mildert. Revenue was up 10% in the first half to GBP143.9 million, with average revenue per advertiser growing more strongly than anticipated, up GBP90 on the same period a year ago to GBP1,077. Pretax profit improved to GBP108.1 million from GBP98.1 million a year ago. Meanwhile, housing transactions fell 4.6% year-on-year. Rightmove has agreed to buy tenant referencing services firm Van Mildert for GBP16 million. Future deferred consideration is capped at GBP4 million.
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COMPANIES - INTERNATIONAL
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Google parent Alphabet after the New York market close on Thursday reported "strong" quarterly growth and unveiled buyback plans. Revenue for the three months to June 30 was up 19% year-on-year to USD38.94 billion, with net income more than tripling to USD9.95 billion from USD3.20 billion. In the year ago period, the company booked a USD5.07 billion fine from the European Commission, a charge which did not repeat in the first three months of 2019. Looking just at Google, advertising revenue was up to USD32.60 billion from USD28.09 billion year-on-year. The unit's operating income was up to USD10.39 billion from USD8.96 billion.
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Intel reported a better than expected second quarter and raised its annual expectations, as it separately agreed to sell its smartphone modem business to iPhone maker Apple. Revenue for the second quarter was down 3% year-on-year to US16.5 billion on a GAAP basis, which the company noted was USD900 million better than previous guidance. Net income fell 17% on a GAAP basis to USD4.2 billion, while on a non-GAAP basis this was down 3% to USD4.8 billion. For the year as a whole, Intel now expects revenue of USD69.5 billion and GAAP earnings per share of USD4.10. Separately, Apple has agreed to snap up Intel's smartphone modem business in a deal valued at USD1 billion.
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Amazon appeared to pay a hefty price for its move to speedy shipping, as the online giant reported profit below expectations as it ramped up for one-day deliveries. Profit edged up just 3.6% to USD2.6 billion in the past quarter, a figure below most Wall Street forecasts. Revenue rose 20% to USD63.4 billion in the April-June period for the company, a dominant force in retail with its Prime subscription service which is moving from two-day to one-day delivery on most items.
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Friday's Shareholder Meetings

B&M European Value
KCOM Group (re acquisition by Meif Fibre 6)
United Utilities
Mothercare
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By Tapan Panchal; tapanpanchal@alliancenews.com

London Briefing is available to subscribers as an email newsletter. Contact info@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Rightmove PLC 661.00 GBX -0.36 -
Pearson PLC 589.60 GBX 0.17
easyJet PLC 1,459.50 GBX -1.22 -
Berkeley Group Holdings (The) PLC 5,126.00 GBX 1.71 -
Vodafone Group PLC 155.12 GBX 0.48
Amazon.com Inc 1,864.72 USD -0.70
Intel Corp 59.60 USD -0.10

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