Today’s half year results from Vodafone (VOD) - and subsequent 7% jump in the share price - tell us one thing loud and clear. This is a story where little else matters outside the dividend.
A typical sea of adjustments and footnotes, new chief executive Nick Read’s ambitions to clean up and simplify the company and how it presents its performance, Vodafone is evidently still a work in progress.
UNHAPPY TIMES
It may be one of the world’s largest mobile network companies but to be a shareholder through 2018 has been a thoroughly miserable experience. In January the share price changed hands at 238p, so at yesterday’s 144.36p level it had lost 40% of its value this year.
By contrast, the FTSE100 is down just 7% over the same period making Vodafone’s shabby performance abundantly clear.
Today the stock is trading at 154.38p, so it’s still an ugly year-to-date performance and arguably even more staggering given that this is a FTSE 100 mega-cap valued at more than £41bn even at today's depressed levels.
MODEST ENCOURAGEMENT
Vodafone was able to hand investors some cheer today by nudging up full year guidance, even if that relies on a new swathe of cost cuts and efficiencies rather than any real improvement to how the business is trading.
Yet the only thing that really matters to investors in Vodafone is that it can keep spewing out hefty dividends. Fears of a cut to that payout have weighed heavily on the minds of investors with many presuming, so far incorrectly, that with a new man at the top a re-basing of expectations was coming.
That it hasn’t so far is a sop for the optimists. But given the current debt pile of €31bn and costly new 5G spectrum licences to be funded, we wonder for how long.
