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Vodafone opts to keep dividend but scraps guidance amid Covid-19

The telecoms company surprised investors by holding onto its dividend, with it managing to narrow its losses despite the economic fallout from the coronavirus crisis.

Vodafone Source: Bloomberg

Vodafone surprised investors by holding onto its dividend for 2020, with the telecoms provider able to narrow its losses despite challenging market conditions caused by the Covid-19 crisis.

However, the telecoms company was forced to scrap its forward-looking 2021 guidance, with the business admitting that it is too difficult to anticipate the impact the coronavirus outbreak will have on its overall performance over the next 12 months.

‘Vodafone has delivered a good financial performance - growing revenue, adjusted EBITDA [earnings before interest, taxes, depreciation and amortisation] and free cash flow – whilst building strong commercial momentum through the year and executing at pace on our strategic priorities,’ Vodafone Group chief executive officer (CEO) Nick Read said.

‘We have also continued to invest in our fixed and mobile Gigabit network infrastructure and digital services, to provide faster speeds for our customers, as well as successfully managing the recent surges in demand,’ he said.

‘The services Vodafone provides are more important than ever and we are committed to playing a key role in society’s recovery to the ‘new normal’,’ he added.

Vodafone full-year results: key figures

  • Vodafone recorded a loss of €455 million in its full-year (FY) results, but it is worth noting that it remains a significant improvement on the €7.64 billion loss it reported in the previous financial year.
  • Operating profit at the telco did rebound, climbing to €4.09 billion, up from the €951 million loss it recorded last year.
  • Revenue surged 3% year-on-year (YoY) to €44.9 billion, with Vodafone opting to keep its €0.09 per share dividend to shareholders.
  • Free cash flow rose 4.7% to €5.7 billion, but net debt climbed 56% to €42.2 billion – 2x EBITDA – due to Vodafone’s acquisition of Liberty Global assets in Germany and Eastern Europe.

Barclays remains optimistic about Vodafone

Despite the challenges the telecoms provider faces, analysts at Barclays remain optimistic about Vodafone, with the lender reiterating its ‘overweight’ rating for the stock.

Barclays also left its target price for Vodafone unchanged at 170p per share, implying a potential upside of 37% for the stock.

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  2. Enter ‘Vodafone’ in the search bar and select it

  3. Choose your position size

  4. Click on ‘buy’ or ‘sell’ in the deal ticket

  5. Confirm the trade

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