LONDON BRIEFING: Vodafone Sells Egypt Stake For USD2.4 Billion

(Alliance News) - Vodafone said Wednesday it has signed a memorandum of understanding with Saudi ...

Alliance News 29 January, 2020 | 8:03AM
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(Alliance News) - Vodafone said Wednesday it has signed a memorandum of understanding with Saudi Telecom Co regarding a potential sale of Vodafone's majority stake in Vodafone Egypt.

Vodafone and Saudi Telecom have agreed a cash consideration of USD2.39 billion for the London-listed firm's 55% stake in Vodafone Egypt. Telecom Egypt holds the remaining 45% stake.

Vodafone and stc have agreed a long-term partner market agreement, which will include use of the Vodafone brand, preferential roaming arrangements, access to Vodafone's central procurement function, and a range of other services.

The transaction is expected to close by the end of June 2020, subject to regulatory approval.

"I am deeply proud of our business in Egypt, being the clear number one leader in the market. Under stc, I believe they will continue to flourish. This transaction is consistent with our efforts to simplify the group to two differentiated, scaled geographic regions - Europe and sub-Saharan Africa. Additionally, it will reduce our net debt and unlock value for our shareholders," said Vodafone Chief Executive Nick Read.

stc Chief Executive Nasser al Nasser added: "The potential acquisition of Vodafone Egypt is in line with our expansion strategy in the MENA region."

Vodafone shares were up 0.5% in early trade Wednesday.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.2% at 7,492.62

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Hang Seng: closed down 790.38 points, 2.8% at 27,159.26

Nikkei 225: closed up 0.7% at 23,379.40

DJIA: closed up 187.05 points, 0.7%, at 28,722.85

S&P 500: closed up 1.0% at 3,276.24

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GBP: firm at USD1.3010 (USD1.2993)

EUR: flat at USD1.1003 (USD1.1008)

Gold: soft at USD1,568.20 per ounce (USD1,569.90)

Oil (Brent): firm at USD60.06 a barrel (USD59.92)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Wednesday's Key Economic Events still to come

Chinese New Year public holiday continues. Shanghai market closed. Hong Kong market open.

0800 CET Germany GfK consumer climate survey

0700 EST US MBA weekly mortgage applications survey

0830 EST US wholesale inventories and trade balance

1000 EST US pending home sales index

1030 EST US EIA weekly petroleum status report

1400 EST US Federal Reserve interest rate decision

1430 EST US press conference with Fed Chair Jerome Powell

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The European Parliament is to set the seal on Britain's departure from the EU in a final vote on UK Prime Minister Boris Johnson's Brexit deal. MEPs meeting in Brussels are expected overwhelmingly to back ratification of the Withdrawal Agreement, paving the way for the UK to leave with a deal in place on Friday. It follows the completion last week of the passage of the Withdrawal Agreement Bill through the British Parliament at Westminster. It was formally signed by the presidents of the European Council, Charles Michel, and the European Commission, Ursula von der Leyen, in Brussels and Johnson in Downing Street.

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UK house prices saw another above-1% annual growth rate in January, according to the latest figures from Nationwide. Month-on-month, house prices increased 0.5% in January after a 0.1% increase in December. On an annual basis, prices were up 1.9% after 1.4% growth in December. January's reading marked the strongest annual growth rate since November 2018.

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Overall shop prices in the UK continued to decline in January, numbers showed, despite food inflation accelerating. According to the British Retail Consortium-Nielsen Shop Price Index, shop prices in the first week of January were 0.3% lower year-on-year, compared with a 0.4% decrease registered in December. Month-on-month, prices were also down 0.3% in January. Non-food prices fell 1.5% annually in January, in-line with 1.5% year-on-year decline in December. Month-on-month, non-food prices were 1.0% lower. Food prices however, surged 1.6% year-on-year in January, rising from December's 1.4% climb. Food prices were 0.8% higher month-on-month in January.

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US Secretary of State Mike Pompeo is flying into the UK amid deep concern in Washington at Johnson's decision to allow the Chinese tech giant Huawei to have a role in the UK's 5G network. The UK National Security Council agreed on Tuesday to give the green light for the firm to play a limited part in building the network, despite repeated appeals by the US not do so. The Trump administration has warned it would suspend intelligence-sharing with any ally that allows the Chinese firm into its 5G networks amid fears security could be compromised. Following the announcement, Johnson spoke to the US president by telephone to explain the decision in an attempt to allay US fears.

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The death toll in mainland China following the outbreak of coronavirus has risen to 132 while nearly 6,000 people are infected, authorities have said. There were 26 deaths recorded in the last 24 hours, with all but one recorded in Hubei province. Authorities added there had been an increase in the number of cases to 5,974, up by 1,459 from Tuesday's figure. Countries on Wednesday began evacuating their citizens from the Chinese city hardest-hit by the outbreak, Wuhan.

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Britons in the coronavirus-hit Chinese province of Hubei could be flown home as early as Thursday as the Foreign Office has warned against "all but essential travel" to the country. The Foreign Office has yet to confirm details, but a teacher in Wuhan city told the PA news agency that UK citizens were being given details of forthcoming flights. Those stuck in the city of Wuhan and surrounding areas have been urged to contact the British consulate before 1100 GMT on Wednesday if they wish to leave. The British embassy in Beijing has said transport to get UK citizens out "may happen quickly and with short notice".

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BROKER RATING CHANGES

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BERENBERG RAISES RYANAIR TO 'HOLD' (SELL) - PRICE TARGET 14 (11) EUR

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HSBC RAISES TUI TO 'BUY' (HOLD)

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COMPANIES - FTSE 250

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Mexican miner Fresnillo reported a full-year decline in gold and silver production. Quarterly silver production of 13.8 million ounces, up 3.7% on the previous three months, brought full-year production to 54.6 million ounces, down 12% on 2018. Gold production in the fourth quarter of 233,700 ounces was up 11% on the third quarter. Full-year production, though, was down 5.1% at 875,900 ounces due to expected lower output from Noche Buena and a lower ore grade at San Julian Veins. Looking to 2020, Fresnillo expects to produce 51.0 million to 56.0 million ounces of silver. Gold production is expected in a range of 815,000 ounces to 900,000 ounces.

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Wizz Air raised its profit guidance as it confirmed "favourable" current trading conditions. Revenue in the three months to December 31 totalled EUR637.3 million, up 25% on a year ago. Earnings before interest, tax, depreciation and amortisation also rose 25%, to EUR131.6 million. Net profit for the quarter was EUR21.4 million, versus a loss of EUR21.0 million a year ago. Looking ahead, the company said it now sees net profit for the 2020 financial year between EUR350 million to EUR355 million, above previous guidance of EUR355 million to EUR350 million. "As previously announced at our H1 results, Wizz Air has reinvested some of its outperformance of the first half in the third quarter, and will grow even faster in the fourth quarter," said Chief Executive Jozsef Varadi. "Wizz Air also confirms that the current trading conditions continue to be favourable with a relatively benign competitive environment, stable fuel prices and a positive yield environment."

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Brewin Dolphin said Chief Executive David Nicol is stepping down, as it separately reported an increase in total funds. Nicol will be retiring after eight years with wealth manager. Robin Beer, currently responsible for Brewin Dolphin's intermediaries, charity, professional services and digital businesses, will be promoted to replace him. Nichol will step down on June 14 and remain with the company until July 29. Separately, Brewin Dolpin said total funds increased by 7.8% to GBP48.5 billion in the first quarter, including GBP2.7 billion of acquired funds from Investec Capital & Investments (Ireland) Ltd. Excluding acquired funds, total funds increased by 1.8%. Discretionary funds increased by 4.2% to GBP41.8 billion, driven by strong investment performance and positive organic net inflows.

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COMPANIES - OTHER MAIN MARKET AND AIM

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Ryanair Holdings warned of potential base closures and job cuts due to delays in the delivery of Boeing Co's 737 MAX aircraft into the autumn, Reuters reported. According to an internal memo dated Tuesday, Ryanair said it expects the aircraft maker to not deliver the first 737 MAX until September or October at the earliest, according to Reuters. The 737 MAX was grounded by aviation regulators last year following two fatal crashes. This comes against Ryanair's expectations back in November of first delivery in March or April, as the airline does not take deliveries of new aircraft during its peak summer months from June to August.

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COMPANIES - INTERNATIONAL

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Apple's profit and revenue for the October-December period, its financial first quarter, topped analysts' projections. Apple got off to a fast start for fiscal 2020, with a first-quarter profit of USD22.2 billion, or USD4.99 per share, on revenue of USD91.8 billion. Analysts polled by FactSet had predicted earnings of USD4.54 per share on revenue of USD88.5 billion. Boosted by the release of the iPhone 11 heading into the Christmas season, the iPhone product generated sales of USD56 billion, an 8% increase from the previous year's disappointing showing. Apple's division that includes its app store, product warranties, music streaming and a new Netflix-like video service delivered revenue of USD12.7 billion, up 17% from the previous year.

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Starbucks posted an earnings increase in its financial first quarter but noted that the recent viral outbreak in China could have negative implications for the business. The coffee chain, which has its headquarters in Seattle, reported pretax earnings of USD1.14 billion for the three months ended December 29. This represents an 18% rise from the previous year's figure of USD965.5 million. Total net revenue rose 7.1% to USD7.10 billion from USD6.63 billion and within this, revenue from company-operated stores rose 7.6% to USD5.78 billion from USD5.37 billion.

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Spanish lender Banco Santander reported a rise in income in 2019, but lower profit, on solid growth from all its geographic regions. In 2019, Santander recorded a pretax profit of EUR12.54 billion, down 12% on the EUR14.20 billion reported in 2018. The slip was blamed on EUR1.74 billion of net charges, including a EUR1.49 billion impairment booked in the UK related to the country's "ring-fencing rules". The lender also noted a rise in restructuring costs in several of its markets. The bank's net interest income, however, rose 2.7% to EUR35.28 billion from EUR34.34 billion. Total income rose 1.7% year on year to EUR49.29 billion.

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Wednesday's Shareholder Meetings

Virgin Money UK

Renew Holdings

Proactis Holdings

Salt Lake Potash

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
TUI AG 332.50 GBX -0.78 -
Ryanair Holdings PLC 8.58 EUR 0.33 -
Vodafone Group PLC 107.78 GBX -2.28

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