Vodafone’s third quarter shows a slowdown in organic revenue growth as shares are trading at their lowest level since December 1997.
The company has stuck to downgraded profit and cash flow forecasts but lack of growth and high debts continue to weigh on sentiment.
“It was legendary investor Jim Slater who noted, ‘elephants don’t gallop,’ as he explained his preference for small caps over large ones, and the pedestrian progress shown by megacap plodder Vodafone would only reinforce the strength of his convictions,” says AJ Bell investment director Russ Mould. “The telco’s third-quarter update reveals a further slowdown in organic revenue growth and although the company is sticking to its previously downgraded earnings and cashflow targets, the shares trade no higher now than they did in December 1997. No doubt Mr Slater would have just nodded and moved on.
“Hemmed in by regulators on one side and competition on another, Vodafone may still be fighting on too many fronts in too many countries, especially as it remains saddled by an awful lot of debt. The latest increase in the liabilities came in calendar 2019 (the fiscal year to March 2020) as a result of the purchase of Liberty Global’s German, Czech, Hungarian and Romanian operations for an all-in price, including their borrowings, of €18.4 billion.”
