Vodafone Q3 results: where next for the share price?

Vodafone will unveil its third-quarter (Q3) results on Wednesday, with investors hoping it will deliver a strong performance, though high capital expenditure driven by a fiercely competitive market has put added pressure on cash flows.

However, despite the challenges it faces, Vodafone upgraded its full-year (FY) 2020 guidance in its interim results in November, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of €14.8 billion - €15 billion, up from €13.8 billion - €14.2 billion – implying organic growth of around 2% - 3%.

Vodafone chief executive officer (CEO) Nick Read told investors that the company hopes to build upon its return to top-line growth in H2 of the financial year, with strong performances expected from its European and African businesses.

‘We have now secured network sharing agreements across most of our major European markets, and we recently announced a major long-term wholesale partnership with Virgin Media in the UK, in order to improve the utilisation of our network assets,’ Read said.

‘We expect our European TowerCo to be operational by May next year, enabling us to continue to unlock the significant value embedded in our tower infrastructure,’ he added.

Vodafone is trading at 149p a share as of 13:50 (GMT) on Monday.

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Analysts optimistic about Vodafone shares in 2020

Analysts are optimistic about Vodafone’s share price trajectory in 2020, with Berenberg, Goldman Sachs, JP Morgan, Morgan Stanley and Deutsche Bank all reiterating ‘buy’ and ‘overweight’ ratings for the stock.

All five investment banks also gave upbeat price targets for the stock too, with Deutsche Bank the most optimistic at 233p.

Analysts from JP Morgan and Morgan Stanley both issued a price target of 215p, while Goldman Sachs and Berenberg offered targets of 190p and 180p respectively.

Based on Vodafone trading at 149p a share, analysts believe the stock has a potential upside of anywhere between 20.8% - 56.4%.

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Vodafone to offload Egypt business to Saudi Telecom

Last month, Vodafone announced that it has agreed to sell its 55% stake in Vodafone Egypt to Saudi Telecom in a deal valued at around $2.39 billion (£1.82 billion).

‘This agreement will ensure that Vodafone Egypt will be able to continue to offer its business and consumer customers world-class services and innovations,’ Vodafone said in a statement.

As part of the deal, both companies have agreed on a long-term market agreement, which will see Saudi Telecom retain the use of Vodafone’s brand, access to its central procurement function, preferential roaming arrangements and a selection of other services.

‘I am deeply proud of our business in Egypt, being the clear number one leader in the market,’ Read said.

‘Under [Saudi Telecom], I believe they will continue to flourish. This transaction is consistent with our efforts to simplify the group to two differentiated, scaled geographic regions - Europe and sub-Saharan Africa. Additionally, it will reduce our net debt and unlock value for our shareholders,’ he added.