Vodafone Shares Rise On Positive 2017 Forecast & Increased Dividend

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Vodafone pledged to investors to grow dividends per share annually, relative to a 2016 ‘baseline’ of 14.48 euro cents per share.

Vodafone forecasted a reversal in its declining profit forward to 2017 resulting in a surge in its share price during early Tuesday morning’s stock market trading.

The telecom giant’s revenues were at 40.9 billion pounds down by 3 percent in the 12 months from March 31 with revenues in group services going down 3.5 percent to 37.2 billion pounds. The group’s organic revenues, on the other hand, went up 2.3 percent.

The company’s operating profits were at 3.12 billion down by 11.1 percent. Operating profit also fell by 30 percent down to 1.38 billion.

Continuing operating losses came to 3.8 billion pounds resulting in a decreased EBITDA of 2.5 percent.

On the other hand, the company is deciding on a dividend recommendation of an increase of 7.77p per share, an increase of 2 percent compared to the year previous pushing up the dividend total to 11.45p per share.

Vodafone says that it is confident on the coming year despite figures that leave investors a little uneasy. The company predicts their organic EBITDA to have an accelerated growth from a range of 3 to 6 percent, or 15.7 billion to 16.2 billion pounds.

The company also expects larger cash flows of at least 4 billion pounds due to the near completion of their major initiative called Project Spring, increasing from 3.2 billion pounds this year.

An important factor for investors is Vodafone’s pledge to “grow dividends per share annually, relative to a 2016 ‘baseline’ of 14.48 euro cents per share, demonstrating confidence in future cash flow generation.”

“This has been a year of strong execution for the group, returning to organic growth in both revenue and EBITDA for the first time since 2008. We achieved the first quarter of positive revenue growth in Europe since December 2010 while growth in AMAP accelerated with strong performance in South Africa, Turkey and Egypt. EBITDA margins also grew year-on-year, supported by our cost efficiency programs,” Vittorio Colao, Vodafone’s chief executive said.

“We now have successfully concluded our Project Spring organic investment programme. This has transformed the quality of our technology, enhancing our customers’ experience and enabling us to expand our Enterprise services. We are pleased to be the leader or co-leader in mobile network quality tests and Net Promoter Scores in the majority of our markets. We have also posted a record quarter of net additions in fixed as our convergence strategy continues to accelerate,” he added.

The company plans on continuing investments in their customer excellence programs in mobile and converged services. Colao said he is confident the company will be able to sustain their positive momentum in the next year allowing them to offer attractive returns for shareholders

Equity research head at Hargreaves Lansdown, Steve Claytons said that the European telecom market is changing. EU regulators cracked down on roaming charges while service providers “play Game of Thrones”when it comes to mergers and acquisitions to take the opportunity presented by quadplay packages. Vodafone is continuing to invest in service improvements to keep their customers, along with coverage services, as the industry continues to change and become fiercer in terms of competition.

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