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Anna Williams

Vodafone

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Hi Anna, Vodafone withdrew its full-year guidance due to the impact of the coronavirus pandemic on international travel. The telecommunications company reported a significant drop in international roaming charges given the lockdown measures implemented by most countries.

However, the company saw a spike in data usage, which should cushion it during this period. The company's future prospects are not as bad as those of firms in other industries such as aviation and hospitality.

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5 hours ago, Simon Mugo said:
5 hours ago, Simon Mugo said:

Hi Anna, Vodafone withdrew its full-year guidance due to the impact of the coronavirus pandemic on international travel. The telecommunications company reported a significant drop in international roaming charges given the lockdown measures implemented by most countries.

However, the company saw a spike in data usage, which should cushion it during this period. The company's future prospects are not as bad as those of firms in other industries such as aviation and hospitality.

Hi Anna, thanks for your question. 

 

As Simon said, the reason behind Vodafone’s decision to pull full-year guidance lies in the uncertainty amid the COVID-19 outbreak. The telecom giant reported full-year core earnings in line with the market expectations of a 2.6% increase to £13.09 billion.

 

Vodafone’s reporting period is April - March, hence the COVID-19 impact is expected in its fiscal 2021 year. 

 

“We are experiencing a direct impact on our roaming revenues from lower international travel and we also expect economic pressures to impact our customer revenues over time,” the company said in a statement.



 

 

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Hello Anna,

According to the reports from May, Vodafone met analysts expectations with a 2.6% increase in full-year core earnings, jumping to 14.9 billion euros ($16.10 billion). However, the second-largest mobile operator in the world didn’t provide full-year guidance due to coronavirus-related issues at the time. 

“We are experiencing a direct impact on our roaming revenues from lower international travel and we also expect economic pressures to impact our customer revenues over time,” Vodafone said.

“However, we are also seeing significant increases in data volumes and further improvements in loyalty, as our customers place greater value on the quality, speed and reliability of our networks.”

Vodafone said that uncertainties and issues caused by the coronavirus epidemic prevented it from presenting adjusted core earnings outlook for 2020. 

Still, the company said the guidance could be slightly lower compared to the 14.5 billion euros for the current year, due to the current economic situation in the world.

However, Vodafone did report the outlook for free cash flow before spectrum expenses, noting we could expect at least 5 billion euros.  

The CEO of Vodafone, Nick Read, cut the company’s dividend last year, taking some pressure off from Vodafone’s balance sheet. The company’s full-year payout of 9.00 euro cents a share remained unchanged.

As for some more recent news, Vodafone UK asked the government to speed up the 5G rollout  process as part of its Covid-19 recovery plan, saying the new cellular network technology could inject as much as £158 billion to the country’s economy over the next 10 years. 

“It is crucial to recognise the role that fast and reliable connectivity will play in unlocking the digital potential that exist in every nation and region across the UK,” said CEO of Vodafone UK, Nick Jeffery.
 

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Hello Anna,

Even though Vodafone faced many serious challenges (LON: VOD), analysts at Deutsche Bank shared their optimism regarding the company’s share price outlook before its first-quarter earnings report on 24 July.

Earlier in July, Deutsche Bank analysts renewed their ‘buy’ rating for Vodafone, setting a target price of 225p per share for the stock, implying a possible upside of 73%.

Vodafone is currently trading at130p per share which close to the figure it closed at last Friday., Shares of telecom provider are down 11% compared to the same period last year.

“The economic impact of the Covid-19 pandemic in our markets, whilst uncertain, is likely to be significant,’ the company said in its full-year 2020 guidance report. ‘Whilst our business model is more resilient than many others, we are not immune to the challenges.”
 

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