Vodafone’s (LON:VOD) share price has soared in London in today’s session, even as the company posted a decline in revenue for the first three months of its financial year. The blue-chip telco, however, also unveiled plans to spin off its European tower infrastructure business.
As of 09:10 BST, Vodafone’s share price had added 7.33 percent to 141.68p, lending support to the benchmark FTSE 100 index which currently stands 0.15 percent higher at 7,500.17 points. The telco’s shares have given up about a fifth of their value over the past year, as compared with about a two-percent fall in the Footsie.
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Vodafone posts Q1 results
Vodafone announced in a statement this morning that its revenue had fallen by €200 million to €10.7 billion in the quarter ended June 30, due to foreign exchange rate effects. The group’s organic service revenue dipped 0.2 percent, improving compared to the previous quarter.
“Our service revenue growth improved during the first quarter, led by Italy, and mobile churn fell to another record low,” Nick Read, Vodafone’s CEO, commented in the statement. “Following a significant quarter of commercial activity, we expect the gradual recovery in our service revenues to continue, underpinning our financial outlook for the year.”
Today’s update comes after the FTSE 100 group recently secured EU approval for the acquisition of Liberty Global’s operations in Germany, the Czech Republic, Hungary and Romania.
Towers business spin-off
Vodafone announced in a separate statement that its European tower infrastructure is to be legally separated into a new organisation, which is expected to be operational by May next year, with a dedicated management team. The new company will include Europe’s largest towers portfolio, comprising 61,700 towers in 10 markets with potential proportionate EBITDA of around €900 million.
Vodafone said that it intends to monetise a substantial proportion of the new company over the next 18 months, with options including an initial public offering or the sale of a minority stake.
According to MarketBeat, the blue-chip telco currently has a consensus ‘buy’ rating, while the average target for Vodafone’s share price stands at 185.06p.