Vodafone Investors Paying the Price for Years of Drift

The Evening Standard (London, England), May 16, 2019 | Go to article overview

Vodafone Investors Paying the Price for Years of Drift


Byline: Anthony Hilton

VODAFONE used to be one of our great companies, one of the global leaders, present in most of the world's major markets. Its sponsorship of sporting events made it a household name. In 2000 its shares topped 400p at a time when it was bidding for and subsequently acquired Mannesmann. That was 19 years ago.

After Tuesday's results its shares were around 130p, just a third of what they were.

Particularly from about 2013, when it did its deal to sell its American subsidiary to Verizon for an astonishing $130 billion (PS101 billion), it has stood still or gone backwards: locked in its time warp, not innovating, not designing, not really doing anything when compared with how it used to be.

Then this week it slashed its dividend by 40% and even had the gall to say that, with this cut, its dividend yield was still above the average.

On that basis it should engineer to halve the share price again. The dividend would then rise pro rata and justify another cut!

Mind you, while the PR spinners stripped out the M&A and other nasty stuff so the group could say it was more or less on target, the reality was that it lost [euro]7.6 billion (PS6.6 billion), so it may not be so fanciful.

Everyone has a mobile phone, if not two, but calls and texts are not where it's at these days. It has not been so for a while. People use their phones to get access to WhatsApp, and Instagram, Twitter and Facebook; they look at emails; they surf the net; they play games; they might even still Skype.

But that does not really help Vodafone.

Its revenue was down a few points, and it said increased competition from lower-cost rivals was part of the problem. That sounds like BT it too is a legacy business struggling to grow.

Vodafone missed out on social media when, had it been more astute, it might have been part of it, not just providing the network.

Or it could have become a payments provider it had the customers, a lot of the technology, billing, and payment systems. Instead it left it to Google, Apple and the Chinese. Or it could even have done 5G rather than leaving that to Huawei, the Chinese company which barely existed 20 years ago.

Huawei now apparently has mobile operators eating out of its hands, presumably because it innovated albeit Donald Trump is not one of its fans. …

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