Vodafone share price: Hargreaves Lansdown flags ‘perennial problems’ for telco

on May 17, 2017
Updated: Oct 21, 2019

Vodafone (LON:VOD) faces ‘perennial problems’ despite being in the black on an operating level, analysts at Hargreaves Lansdown have said. The comments came after the telecoms giant updated investors on its full-year performance yesterday, posting a hefty annual loss, but flagging profit growth going forward.

Investors responded positively to the telco’s results, sending Vodafone’s share price 3.96 percent higher to close at 219.45p. The shares boosted the FTSE 100 index which added 67.66 points to close 0.91 percent higher at 7,522.03.
Citywire quoted Hargreaves Lansdown analyst George Salmon as saying yesterday that Vodafone’s UK business was still suffering a ‘hangover’ from the implementation of a new billing system and that there was ‘the small matter of a €6.1 billion loss on the bottom line’, but at an operating level the telco was ‘still in the black’. The FTSE 100 group updated investors on its full-year performance yesterday, posting a hefty loss on the back of a net of tax impairment of €3.7 billion on its Indian business which has been facing significant competition.

“Vodafone has the perennial problem of balancing fierce competition on tariffs with the punitive costs of acquiring spectrum refreshing infrastructure, which are for the most part unavoidable,” Salmon pointed out, adding that as far as investors were concerned, this had “translated into a dicey balance between Vodafone’s free cashflow and the dividends it pays out to shareholders.”
“Hopefully coverage can improve in future,” the analyst concluded. The FTSE 100 telco said yesterday that it was lifting its dividend by two percent.
Sanford Bernstein, which has a ‘neutral’ rating on Vodafone, set a price target of 200p on Vodafone yesterday. Beaufort Securities meanwhile hiked its stance on the telco to ‘buy’, lifting its valuation on the shares from 185p to 260p.
As of 08:02 BST, Wednesday, 17 May, Vodafone Group plc share price is 219.00p.

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