Telecommunications firm Vodafone (VOD) is hiking its full year earnings growth guidance to approximately 10%, up from a previous range of 4% to 8%.

Shares in Vodafone are up 5.5% to 227.8p as the increased guidance suggests earnings before interest, tax, depreciation and amortisation (EBITDA) will hit between €14.75bn and €14.95bn.

Analysts believe there could be dividend rises in the future with free cash flow now expected to exceed €5bn.

We recently flagged Vodafone as one to watch, noting its success in both Europe as well as emerging economies in Africa, the Middle East and Asia Pacific, driven by a comprehensive offering which offers voice, data, cloud for business and entertainment services.


Chief executive Vittorio Colao says sales grew organically in the majority of the company’s markets, driven by higher mobile data usage.

Operating profit has increased 32.5% to €2,008m in the six months to 30 September thanks to operational leverage and cost-cutting initiatives. The dividend is also up 2.1% to 4.84c.

UBS analyst Polo Tang says adjusted earnings rose 13% to €7,385m over the same period, beating consensus forecasts for growth of 8%.

Lower regulatory drag from EU roaming cuts, a one-off from a UK regulatory settlement and the introduction of handset financing in the UK are also behind the impressive performance.

Tang flags that nearly every geographic region was ‘noticeably ahead’ of consensus with the exception of sub-Saharan Africa-based Vodacom, which grew 3.4% compared to expectations of 4.6% due to promotions for data pricing.

Issue Date: 14 Nov 2017