Analysts at Deutsche Bank have called Vodafone’s (LON:VOD) plans to invest €2 billion in Germany ‘mixed news’ for investors, Citywire has reported. The comments came as the bank nevertheless reiterated its bullish stance on the London-listed telecoms giant.
Vodafone’s share price lost ground in the previous session, shedding 0.76 percent to 214.55p, slightly underperforming the broader UK market, with the benchmark FTSE 100 index closing 0.17 percent lower at 7,400.69 points. The group’s shares have lost a little over three percent of their value over the past year, but have added some seven percent in the year-to-date.
Deutsche Bank reiterated its ‘buy’ rating on Vodafone yesterday, with a price target of 300p on the shares. The move came after the blue-chip telco announced plans to invest approximately €2 billion of incremental capital expenditure in Germany by the end of calendar 2021 in Gigabit ultrafast fibre broadband services, which are expected to deliver around 13.7 million new gigabit connections to consumers and enterprises.
Citywire quoted the broker’s analyst Robert Grindle as saying that there would be around a three-percent ‘near term free cashflow dent’ which was ‘mixed news for investors hoping for increased dividend cover’. He further noted that Vodafone’s move may push other providers to step up their own fibre broadband plans.
“Vodafone’s increasing willingness to invest in substantial fibre projects represents a significant risk for other incumbents across Europe,” Grindle pointed out.
The news comes after Vodafone recently moved to boost its share in the youth market at home, launching a new brand. The new brand, called Voxi, is targetting customers up to the age of 25, allowing them to use selected social and chat apps as much as they like, without affecting the data allowance.