Vodafone remains one of the most widely traded equities in the FTSE 100, and as the second largest company quoted in the UK with a weighting of 5.65% it forms an integral part of many funds’ portfolios.
In the last couple of years the company has become increasingly reliant on its 45% stake in the US telecommunications company Verizon Wireless. In fact it has been the dividend from this holding that has ensured the company has been able to show a profit on an annualised basis.
The difficult economic environment in the EU has seen sales fall and profits diminish, and these latest figures have shown that sales in Spain are down 10.6% and sales in Italy are even worse, down 17.6%. This has partly contributed to a write-down of European business of some €7.7 billion.
So where does this leave Vodafone? Questions have been circling over the possibility of the company selling its stake in Verizon for some time, and the US company is widely believed to be looking for ways of moving forward unhindered by the shackles of Vodafone. If a sale were to come to fruition then the company could expect $120 billion, and with that sort of capital available some extensive expansion and restructuring could be undertaken.