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Vodafone Group PLC ADR VOD

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Vodafone Delivered Solid Profitability During the First Half of Fiscal 2022

Analyst Note

| Michael Hodel, CFA |

Vodafone posted solid profitability during the first half of fiscal 2022 despite continued uneven growth across countries. Management also stated that it hopes to find a partner for Vantage Towers that would enable it to reduce its stake in the tower firm, allowing Vantage greater financial flexibility and better highlighting its value. The firm also intends to pursue in-country mergers across Europe, particularly in Spain, to improve its ability to earn acceptable returns on capital. These priorities are logical in our view, as we believe the market has overly discounted the value of Vodafone’s assets and the competitive environment remains very challenging in several places. However, considerable uncertainty surrounds these efforts, particularly as it relates to the regulatory response to any move. We don’t expect to materially change our GBX 185 fair value estimate and we believe the shares are attractive.

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Company Profile

Business Description

With about 270 million wireless customers, Vodafone is one of the largest wireless carriers in the world. More recently, the firm has acquired cable operations and gained access to additional fixed-line networks, either building its own or gaining wholesale access. Vodafone is increasingly pushing converged services of wireless and fixed-line telephone services. Europe accounts for about three fourths of reported service revenue, with major operations in Germany (about 30% of total service revenue), the U.K. (13%), Italy (12%), and Spain (10%). Outside of Europe, 65%-owned Vodacom, which serves sub-Saharan Africa, is Vodafone's largest controlled subsidiary (12% of total service revenue). The firm also owns stakes in operations in India, Australia, and the Netherlands.

Vodafone House, The Connection
Newbury, Berkshire, RG14 2FN, United Kingdom
T +44 163533251
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Sep 30, 2008
Fiscal Year End Mar 31, 2022
Stock Type
Employees 104,755