Tags: Vodafone | VOD | telecommunications | stocks

Vodafone: Leader of the Cell Phone World

By Dan Weil   |   Tuesday, 20 Sep 2011 08:33 PM

Vodafone (VOD), the world’s biggest cell phone service provider, is riding the boom in mobile phone usage. In particular, it’s trying to take advantage of the trend toward smartphones and heavy data usage.

Europe is the most important market for Vodafone in terms of revenue and profit. The company is based in Newbury, England. It plans to raise the portion of its European sales that come from smartphones to 70 percent in the fiscal year ending in March 2013, compared to 30 percent last year.

Vodafone is in the midst of shedding non-core assets and building up others. It recently sold a minority stake in China Mobile and cut its holding in Japan’s Softbank Corp. The company also finished unloading its 44 percent holding in French cell phone operator SFR for 7.95 billion euros ($10.8 billion) in June.

Vodafone announced March 31 that it will buy an additional 33 percent stake in its Indian joint venture Vodafone Essar for $5 billion after partner Essar Group exercised an option to sell its stake in India’s third-largest cell phone service provider.

Vodafone also has a 45 percent stake in Verizon Wireless and will receive a $4.5 billion dividend on that holding in January. Vodafone’s service revenue, which includes voice, data, messaging and broadband services, rose 1.5 percent in the quarter ended June 30 from a year earlier.

Signs of a turnaround

Standard & Poor’s analyst James Crawshaw has a four-star buy rating on Vodafone shares. “Recent results have shown signs of a turnaround in European operations. We also believe that strong results from Verizon Wireless bode well for VOD,” he writes.

“We have seen positive data trends due to increased smartphone penetration in key markets, helping offset regulatory and competitive pricing trends in Europe. We also view favorably that VOD has begun to unwind stakes in non-core assets, which should help the company achieve its plans for dividend increases, debt pay-downs, and share repurchases.”

The company next reports around Oct. 22.

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Vodafone (VOD), the world s biggest cell phone service provider, is riding the boom in mobile phone usage. In particular, it s trying to take advantage of the trend toward smartphones and heavy data usage. Europe is the most important market for Vodafone in terms of...
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