Vodafone Group PLC (VOD)’s shareholders aren’t short of concerns in the lead-up to the telecoms group’s full-year results on Tuesday, May 16.
Loss-making German operations (its largest global contingent), doubts around its long-awaited merger with Three UK on national security grounds, intense pressure from shareholders to turn its rubbish share price around, and an ongoing struggle to pay down its £40bn(US$49.84billion) debt pile are all valid anxieties.
At least Vodafone’s market-beating dividend policy will remain, right?
Newly instated chief executive Margherita Della Valle will want to get her mission underway with some positive news to investors, hopefully in relation to that pesky Three merger.
UBS sees the pricey dividend being maintained but the bank’s outlook on Germany is a bit of a mixed bag.
“We are wary that German subscriber trends for Vodafone may continue to be weak, although the market should benefit from recent price rises,” said UBS analysts, adding: “We expect Vodafone to continue with its stated M&A agenda and simplify the group amid strategic investors increasing their stakes in the company.”
Investor reaction on the sustainability of Vodafone’s dividend “will hinge on evidence the German business is turning around and does not require significant investment”, said analysts.
Strategic investors, for the record, include Emirati telecoms giant e& (formerly Etisalat), which is Vodafone’s largest shareholder with a 14.6 per cent stake.
e&’s chief executive Hatem Dowidar is seeking greater influence at Vodafone by way of being appointed to the board as a non-executive director.
Can Vodafone’s market-beating dividend policy survive all this scrutiny? We shall find out on Tuesday.
- Editor’s Note: The above has been published by Proactive Investors Limited on its website and is made available subject to the terms and conditions of use of its website.
