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Vodafone shares have been taking a pummeling over the last 12 months and are now down over a third for the year. There are very serious concerns that continue to swirl around Vodafone’s €18.4 billion acquisition of Liberty Global’s cable networks in Europe. Beyond this, there is also now heated competition in not only the UK, but also Spain and Italy.

Vodafone is also going to have to stump up plenty of cash if it is going to participate in 5G spectrum auctions in the UK and Italy, and that’s before you take other markets where Vodafone competes into consideration.

New CEO Nick Read has a lot to take on board and is facing his first change to engage with the analyst community this week. Analysts are going to be looking for growth guidance on underlying adjusted EBITDA, which the market wants to see at between 1-5% versus last year’s figure of €14.75 billion.

There is also going to be a big question mark hanging over free cash flow before costs involved in those pricey 5G auctions.

Vodafone shares – too much dividend love?

Then there’s the question of the Vodafone dividend: this has grown every year since Vodafone shares originally floated in 1998. Some analysts think the combination of debt and competitive pressures – and, yes, those pesky auctions – are going to put that proud record under threat, and they could well be right.

Last year, Vodafone made an interim payment of 4.84 cents on its way to a full year dividend of 15.07 cents.

Vodafone is also facing a tough contest in the German market, where German broadband providers are now actually challenging its Liberty acquisition on the grounds that it would hurt competition. The European Commission is expected to rule on the deal on 27 November.

The broadband business group is arguing that it wants to avoid a duopoly between Vodafone and Deutsche Telekom, and a potential delay on the construction of a pan-German fibre-optic network.

“The EU Commission must block the planned takeover, because mergers that hinder effective competition aren’t compatible with the law,” said Stephan Albers, who heads up BREKO, the broadband group, which includes 320 member companies.

The Vodafone share price looks like a veritable car crash for investors: there has been pretty consistent selling over the last six months with the Vodafone share price dropping like a stone from around 215 to its Friday close of 143.92. Unless there is some truly amazing news on Tuesday, Vodafone shares look like they have some way to go.

With the EC ruling looming at the end of the month, we can’t see how Vodafone shares can be pulled out of this swan dive.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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