Vodafone Group PLC ADS (VOD): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


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Vodafone reported mixed financial numbers for the for the six-month period ended Sep 30, 2014. Adjusted earnings per share declined 46.5%, while revenues increased 8.9% year over year on a reported basis. The year-over-year increase in revenues was primarily driven by an 18.6% jump in sales from the European region. However, Vodafone's move to expand wireless services in emerging markets and the promotion of M-Pesa in Africa and Europe will remain accretive for future growth. Further, key acquisitions and the divestiture of Verizon Wireless stakes are also likely to benefit the financials. Going forward, we expect the continuous investments in project Spring and the underlying economic weakness in Europe to act as headwinds for the company. Hence, we maintain our Neutral recommendation on Vodafone.


Based in Newbury, United Kingdom, Vodafone Group Plc (VOD) is the world's largest revenue generating wireless communications operator and the second largest (behind China Mobile) carrier based on subscriber count. The company offers an array of products and services, including voice, messaging, data and fixed-line solutions and devices as per customers' communications needs.

Vodafone operates independently and through affiliates, notably under the Vodafone brand name. Vodafone is the leading wireless operator in the U.K. and has a major presence in Europe, the Middle East, Africa and Asia Pacific. Vodafone owned 45% of Verizon Wireless, the largest U.S. wireless service provider prior to sale of its interest to Verizon Communication on Feb 21, 2014. With the purchase of Hutchison Essar (now Vodafone Essar) in fiscal 2007 for 5.5 billion ($11 billion), Vodafone became a one of the leading provider of wireless service in India. In Apr 11 2014, Vodafone acquired an additional 10.97% stake in its Indian joint venture Vodafone India from partner Piramal Enterprises Ltd. for INR 101.418 billion ( 1 billion). This led to full takeover of its Indian subsidiary.

Effective Oct 1, 2013, Vodafone merged its Northern & Central Europe and Southern Europe regions into one Europe region. The company reports operating results of Turkey within the Africa, Middle East and Asia-Pacific region due to the country's emerging market characteristics.

The Africa, Middle East and Asia Pacific (AMAP) region includes the company's interests in Egypt, India, Ghana, Kenya, Qatar, Vodacom and Turkey. Vodafone also benefits from interests in Australia, New Zealand and Fiji.

Europe region includes Vodafone's operation in Germany, the UK, the Netherlands, the Czech Republic, Hungary, Ireland and Romania, Italy, Spain, Greece, Portugal, Albania and Malta.

On Oct 31, 2012, Vodafone acquired TelstraClear Limited, the New Zealand business of Telstra Corporation for NZ$840 million ( 429 million) in a cash consideration. The acquisition is expected to remain accretive to the company's fixed communications business and strengthen the market position for its operations in New Zealand.

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