Vodafone share price still rallying after $16 billion Tower IPO progresses

Vodafone saw its share price climb higher on Friday after UBS and Morgan Stanley were reported to be handling the company’s European Tower IPO, according to Reuters.

The deal, which is valued at approximately €16 billion (£14.6 billion), saw both investment banks and US-based Goldman Sachs pitch to become joint global coordinators in the listing, which is expected to get underway in the first quarter (Q1) 2021, according to Reuters sources.

The news helped Vodafone shares climb more than 1% to 128p per share at the time of publication, with the stock showing signs of recovery despite still being 12% down year-to-date.

Vodafone announced its plan to carve out its mobile mast in Europe last year, with telecoms provider looking to list a minority stake in its towers unit.

Signs of Vodafone’s Tower IPO progressing is promising for capital markets that have had to endure a relative drought this year, with European IPOs raising just $5.6 billion in H1 2020 – the lowest level since 2012, according to data compiled by Refinitiv.

Deutsche Bank eyes signifcant gains for Vodafone

For Vodafone and its peers like BT, the decision by the UK government to ban Huawei 5G kit is yet another setback this year and will hinder their development of essential communications infrastructure across the country.

However, analysts at Deutsche Bank remain optimistic about the Vodafone, with the German lender reiterating its ‘buy’ rating and issuing a target price of 225p per share – implying a potential upside of 80% for the stock.

UK government bans purchase of Huawei 5G components

Media secretary Oliver Dowden confirmed that British telecoms providers will be banned from buying 5G equipment produced by Huawei from the end of this year, with MPs eager to phase out the Chinese firm’s technology from its infrastructure over national security concerns.

‘The NCSC (National Cyber Security Centre) has now reported to ministers, that they have significantly changed their security assessment of Huawei’s presence in the UK’s 5G network,' Dowden told MPs.

‘This has not been an easy decision, but it is the right one for the UK telecoms networks, for our national security and our economy, both now and indeed in the long run,’ he said.

‘By the time of the next election, we will have implemented in law an irreversible path for the complete removal of Huawei equipment from our 5G networks.’

Unsurprisingly, Beijing and Huawei are not happy with the UK government’s decision, with the Chinese firm warning that the move ‘threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide’.

Meanwhile, the Chinese ambassador to the UK, Liu Xiaoming, urged the government to reconsider its ban on Huawei equipment and warned that there would be serious consequences if Britain continues to treat China as a ‘hostile country’.

How to trade stocks with IG

Looking to trade Vodafone and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

1. Create an IG trading account or log in to your existing account
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