Vodafone: FTSE 100 giant set to report after Three deal gets boost

Vodafone is unlikely to wow investors next Tuesday, despite chief executive Margherita Della Valle’s attempts to revive the telecoms giant’s struggling share price.

Shares in the London-listed firm have barely moved this year, up just over three per cent since January.

That’s despite Della Valle flogging off its Spanish and Italian businesses in an attempt to trim costs and, more recently, pushing forward a merger deal with its UK arm and Three.

There were tentative signs last week that the £15bn tie-up between two of the UK’s largest mobile networks might get the go-ahead, with the Competition and Markets Authority (CMA) saying it had “the potential to be pro-compeitive” for the mobile sector.

Russ Mould, investment analyst at AJ Bell, described the deal as a possible “game-changer” for the operator, given its potential to boost customer numbers and trigger investment.

Amid “sluggish” turnaround efforts and a loss in brand strength, Vodafone “now seems to be slowly regaining its mojo, selling assets to become a leaner, more focused business, but there is still a long way to go,” Mould said.

Recent news is unlikely to play a major role in next week’s interim update though. Revenue growth and surging debts are still key issues, while Vodafone has struggled to perform in its largest market, Germany.

The group posted a 2.8 per cent rise in total revenue to £7.6bn in July and a 42.9 per cent rise in operating profit to £1.3bn.

But shares dipped on the announcement as the results failed to live up to investors expectations.

Vodafone is currently guiding for full-year adjusted earnings of around £9.1bn and at least £2bn in adjusted free cash flow.

Veteran city analyst Michael Hewson said the firm had endured a “torrid time of late. The rot set in soon after it sold its stake in the US-based Verizon back in 2014, which since then has seen the share price crater.

“Management have also made a series of questionable decisions as they look to turn the business around.”

However, he noted “some good news” this year, in the form of a 10-year deal with Microsoft to integrate generative AI into its service, a boost for its 300m customers.

He added: “In other news the CMA does appear minded to greenlight the merger between Vodafone and Three as long as various conditions are met with respect to pricing and competition.”