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1. Company Snapshot

1.a. Company Description

Vodafone Group Public Limited Company engages in telecommunication services in Europe and internationally.The company offers mobile services that enable customers to call, text, and access data; fixed line services, including broadband, television (TV) offerings, and voice; and convergence services under the GigaKombi and Vodafone One names to customers.It also provides value added services, such as Internet of Things (IoT) comprising logistics and fleet management, smart metering, insurance, cloud, and security services; and automotive and health solutions.


In addition, the company offers M-Pesa, an African payment platform, which provides money transfer, financial, and business and merchant payment services; and various services to operators through its partner market agreements.Vodafone Group Public Limited Company has a strategic partnership with Open Fiber.As of March 31, 2022, it had approximately 323 million mobile customers, 28 million fixed broadband customers, and 22 million TV customers.


The company was incorporated in 1984 and is based in Newbury, the United Kingdom.

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1.b. Last Insights on VOD

Vodafone's recent momentum is driven by strong revenue and EBITDAaL growth, fueled by strategic mergers and network expansions. The company's dividend increase, its first in seven years, has boosted investor confidence. Improved growth prospects in key markets, particularly Germany, have contributed to the positive outlook. Analysts have upgraded their price targets, reflecting renewed optimism. Vodafone's upgraded earnings outlook and return to growth have led to a more favorable view, with a consensus analyst price target of £0.88 per share.

1.c. Company Highlights

2. Vodafone's Transformation Drives Growth

Vodafone's financial performance in the first half of the year was robust, with service revenue growth accelerating to 5.8% in Q2, driven by growth across Europe and Africa. Group EBITDAaL grew by 6.8%, with nearly all markets posting EBITDAaL growth. The company's EPS came out at 0.06041, beating estimates of 0.03719. The strong financial performance is a testament to Vodafone's transformation progress, with the company confirming it will close the year at the upper end of its growth guidance.

Publication Date: Nov -12

📋 Highlights
  • Accelerated Service Revenue Growth:: Q2 service revenue rose 5.8%, driven by Europe and Africa, with ex-Turkey growth at 3%.
  • Strong EBITDAaL Performance:: H1 EBITDAaL grew 6.8%, with nearly all markets reporting growth, confirming full-year upper guidance.
  • Dividend and Shareholder Returns:: Returned €5 billion over 18 months and plans €1 billion in buybacks over 6 months, targeting a 2.5% dividend yield growth.
  • Germany's 5G Leadership:: 5G standalone coverage exceeds 90% of the population, serving 40 million customers with improved satisfaction and churn reduction.
  • UK Integration Success:: Cost and CapEx synergies on track, with cross-selling benefits and network quality improvements driving better-than-expected Q2 performance.

Operational Highlights

Vodafone's operational performance was strong, driven by growth in consumer and B2B segments. The UK integration is progressing well, with cost and CapEx synergies on track. Germany's turnaround continues, with improving customer satisfaction and churn reduction. The company's Turkish business has seen significant growth, with EBITDA and cash flow increasing by almost EUR 300 million over the last two years. Vodafone's FWA proposition in the UK has shown a net add of 17,000 in the quarter, and the company sees FWA as an opportunity to bridge the time until fiber comes and to cover rural areas.

Growth Prospects

Vodafone's growth prospects are promising, with the company having a strong position in its largest markets, Germany and the U.K. The company's fiber JV, OXG, has made progress, with 350,000 households built and 1 million households opened for sales. Vodafone's B2B business is also expected to drive growth, particularly in digital services, which now account for over 1/4 of its B2B revenues. The recent acquisition of Skaylink is part of Vodafone's strategy to grow its B2B business. As Margherita Della Valle, Vodafone's CEO, notes, the company will prioritize areas with strong demand and good returns.

Valuation

Based on the current valuation metrics, Vodafone's P/E Ratio is -6.69, and the Dividend Yield is 3.68%. The EV/EBITDA ratio is 5.94, indicating a relatively reasonable valuation. With analysts estimating next year's revenue growth at 14.5%, Vodafone's valuation appears to be reasonable, considering its growth prospects. The company's return on investment strategy includes a progressive dividend policy, with a 2.5% dividend yield for the first year, expected to grow annually.

Outlook

Vodafone's focus is on disciplined execution, operational excellence, and customer simplicity to drive growth. The company has completed its major restructuring efforts, including the UK merger, and now aims to make the most of its growth opportunities in Germany, the UK, and Africa. With a strong operational performance and promising growth prospects, Vodafone is well-positioned to deliver long-term value to its shareholders.

3. NewsRoom

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Vodafone (LSE:VOD): Assessing Valuation After a Strong 1-Year Share Price Rebound

Dec -04

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Dear AST SpaceMobile Stock Fans, Mark Your Calendars for December 15

Dec -04

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AST SpaceMobile, Inc. (ASTS): A Bull Case Theory

Dec -04

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South Africa telecoms giant Vodacom to take control of Kenya's Safaricom

Dec -04

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Vodafone to gain control of and fully consolidate Safaricom

Dec -04

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O2, Vodafone, EE and Three face £1.1bn lawsuit in UK

Dec -03

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Why the Narrative Around Vodafone Is Shifting After Recent Analyst and Market Updates

Dec -02

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These Are the 3 Biggest Stocks in Alphabet’s Secret Portfolio

Nov -22

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.54%)

6. Segments

Germany

Expected Growth: None%

None

Africa

Expected Growth: None%

None

United Kingdom

Expected Growth: None%

None

Other Europe

Expected Growth: None%

None

Rest of The World - Turkey

Expected Growth: None%

None

Common Functions

Expected Growth: None%

None

Eliminations

Expected Growth: None%

None

7. Detailed Products

Mobile Voice

Vodafone offers mobile voice services, enabling customers to make and receive calls, send texts and access data on the go.

Mobile Data

Vodafone provides mobile data services, allowing customers to access the internet, stream content, and use data-intensive apps on their devices.

Fixed Broadband

Vodafone offers fixed broadband services, providing customers with high-speed internet access in their homes and businesses.

TV Services

Vodafone provides TV services, offering a range of channels, on-demand content, and streaming capabilities.

Internet of Things (IoT)

Vodafone's IoT services enable businesses to connect and manage devices, machines, and sensors, improving operational efficiency and decision-making.

Cloud and Hosting

Vodafone offers cloud and hosting services, providing businesses with scalable, secure, and reliable infrastructure solutions.

Cyber Security

Vodafone's cyber security services protect businesses from cyber threats, ensuring the integrity of their data and systems.

Unified Communications

Vodafone's unified communications services integrate voice, video, and data services, enhancing collaboration and productivity.

8. Vodafone Group Public Limited Company's Porter Forces

Forces Ranking

Threat Of Substitutes

Vodafone faces moderate threat from substitutes such as fixed-line broadband and Wi-Fi, but the impact is limited due to the convenience and mobility offered by mobile services.

Bargaining Power Of Customers

Vodafone's customers have a high bargaining power due to the availability of multiple mobile operators and low switching costs, allowing them to easily switch to competitors.

Bargaining Power Of Suppliers

Vodafone's suppliers, such as network equipment providers, have a low bargaining power due to the company's large scale and negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The mobile telecommunications industry is highly competitive, with multiple players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 47.55%
Debt Cost 5.22%
Equity Weight 52.45%
Equity Cost 6.36%
WACC 5.82%
Leverage 90.65%

11. Quality Control: Vodafone Group Public Limited Company passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Orange

A-Score: 7.2/10

Value: 6.3

Growth: 3.9

Quality: 4.4

Yield: 9.4

Momentum: 9.5

Volatility: 9.7

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AT&T

A-Score: 7.0/10

Value: 7.1

Growth: 2.6

Quality: 5.7

Yield: 9.0

Momentum: 8.5

Volatility: 9.3

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Verizon

A-Score: 6.9/10

Value: 7.0

Growth: 3.1

Quality: 5.5

Yield: 10.0

Momentum: 5.5

Volatility: 10.0

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Orange Polska

A-Score: 6.5/10

Value: 7.3

Growth: 4.1

Quality: 4.5

Yield: 8.1

Momentum: 7.0

Volatility: 8.0

1-Year Total Return ->

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Vodafone

A-Score: 6.1/10

Value: 9.4

Growth: 1.2

Quality: 2.0

Yield: 8.8

Momentum: 7.5

Volatility: 8.0

1-Year Total Return ->

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Swisscom

A-Score: 6.1/10

Value: 5.0

Growth: 2.8

Quality: 6.4

Yield: 6.9

Momentum: 5.5

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.94$

Current Price

0.94$

Potential

-0.00%

Expected Cash-Flows