Vodafone Group is a British multinational telecommunication company whose stock prices are at 50% off their 2021 peak prices amid fabulous dividend yield at 9.1% and a buyback yield at 7.6% (16.7% overall). Prices of VOD shares are close to 1997 levels and is seems that there is almost no room for them to decline any further.
The company is very vulnerable to the rising U.S. Dollar and overall weakness of the European economy. The negative factor is that telecom companies are inclined to borrow in order to finance their current operations. Rising interest rates and expensive borrowings are the major worries in this regard. However, these factors have already been priced in.
On a positive note, Vodafone is expanding in Africa and revenues per user are expected to rise worldwide so this is expected to create a rise in overall revenue. The partial sale of the Vanta Towers lowered the company’s overall debt, while consolidation with the rival Three UK may increase domestic profits. There are many debates within the European telecom industry on whether the companies have come together in order to unite their efforts to lower their costs and redirect this saved capital towards 5G network development. After Brexit British Telecom (BT) has been given the chance to decide on its own fate while European regulators insist on completion at any cost.
