Shares in Vodafone (LON:VOD) have fallen deep into the red in today’s session, ahead of the telco’s preliminary results tomorrow. The Times meanwhile reports that the company is set to slash its payout to shareholders as it looks to pay for pricey auctions for mobile phone airwaves in Germany and Italy.
As of 09:45 BST, Vodafone’s share price had given up 3.64 percent to 133.94p, weighing on the benchmark FTSE 100 index which currently stands 0.03 percent lower at 7,199.73 points. The telco’s shares have given up more than 36 percent of their value over the past year, as compared with about a seven-percent gain in the Footsie.
Dividend cut on the cards?
The Times reported today that Vodafone’s board was expected to rein-in the telco’s full-year payout at the group’s preliminary results tomorrow. The newspaper notes that the telecoms giant has one of the highest dividends on the FTSE 100 index, with a yield of more than nine percent. Vodafone’s shareholder payouts are estimated to have cost the company €3.9 percent last year.
Chris Beauchamp commented in a note last week a dividend cut at the telco “would send shockwaves through investors, who have become used to the regular and solid payouts”.
IG reports that Vodafone is expected to report a 19-percent fall in annual earnings, to 9.5 cents per share, while revenue is forecast to have fallen 3.7 percent on an annual basis, to €44.9 billion.
Analyst ratings update
Berenberg Bank, which is bullish on the FTSE 100 telco with a ‘buy’ rating, set a target of 190p on the Vodafone share price today, while JPMorgan Chase & Co reaffirmed the company as an ‘overweight,’ valuing the stock at 209p. According to MarketBeat, the blue-chip telco currently has a consensus ‘buy’ rating and an average price target of 187.72p.