Vodafone: Lowering Fair Value Estimate to GBX 100 Due to Weaker Long-Term Outlook

We lower no-moat Vodafone’s fair value to GBX 100 from GBX 125 as we take a more bearish long-term stance. This is supported by our gloomy outlook for the European telecom sector, where regulation is a major strain and Vodafone’s weaker competitive position in Germany and the UK, where it has a network disadvantage compared with Deutsche Telekom and BT Group. We still see shares as 33% undervalued, trading at 5 times EV/EBITDA after leases, in the low range compared with other peers. Investors might need patience as we don't see near-term catalysts.