Close eye on Vodafone results

Mobile network giant Vodafone will next week look to convince investors that it remains on track amid debt concerns and increased competition.

The group is due to report its latest annual results following a challenging couple of years for its investors, with the shares losing half their value since the beginning of 2018, on a combination of concerns over debt levels and underperformance across parts of the business.

Michael Hewson, chief market analyst at CMC Markets UK, noted that the company had cut its dividend due to worries over rising debt levels. In November, Vodafone took a £1.9 billion hit due to problems in India.

“The company will also face challenges as it strives to compete with BT and Telefonica in light of the latter’s deal to buy Liberty Global’s UK broadband and TV assets,” Hewson noted. “In a time of big consolidations in the telecoms sector Vodafone runs the risk of becoming ‘Billy no mates’, having tried and failed to secure similar deals in the past.”

On Thursday, the parent groups of Virgin Media and O2 announced that the pair were to merge to create a £31 billion media and telecoms giant.

Liberty Global and Telefonica – the owners of Virgin

Media and O2 respectively – had said on Monday that they were in discussions over a possible combination.

The tie-up between the two companies will create a major rival for the likes of Vodafone and BT, which owns EE, the UK’S second largest mobile network.

Russ Mould, investment director at AJ Bell, said: “Germany is Vodafone’s biggest market after the Liberty Global deal and competition here, in Italy, Spain and the UK has been fierce, especially in the mobile market, but Vodafone will be hoping that 5G and new broadband services offerings will lessen churn and help cash flow.”

Results are due on Tuesday.