Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a733531

QEV: how Vodafone’s capital return will shape markets

by Robert St George on Feb 12, 2014 at 11:40

Others are more circumspect in their expectations. Paul Kavanagh, a partner at Killik, observes that Vodafone is well owned by global investors. ‘It would be wrong to suggest that all of it comes back into the UK.

I suspect the cash will be spread across international markets. While the headline sums look attractive, once you strip it all out I don’t think you will see a noticeable effect.’ Kitchenham predicts that the impact will be felt slowly, as the proceeds are reallocated gradually rather than instantly. ‘Some will feel the cash is burning a hole in their pocket and some will be more relaxed.’

As for Vodafone itself, few are excited by the prospects for what remains of the business. Citywire AAA-rated Richard Colwell, manager of the £2.5 billion Threadneedle UK Equity Income fund, is not tempted by the firm.

‘In terms of the core business and the fact they have indicated they need to invest more capital expenditure and they appear to be quite keen to buy fixed-lined assets in Europe, I think that vindicates some of the operational concerns that I had over Vodafone – that their core cash flows were not as stable as a lot of people thought.’

Whether Vodafone opts for a series of bolt-on acquisitions or a transformative deal such as a merger with BSkyB, Kavanagh acknowledges that ‘you have some deal risk here’. Godber concurs that ‘there is going to be an enormous amount of corporate activity in this market’.

Optimists can instead highlight Vodafone’s exposure to Europe, says Kavanagh, and particularly the south of the continent. ‘Savvy investors will appreciate that European markets are recovering,’ Kitchenham commented. Clark is doubtful, due to the pressure on telecom margins in Europe. ‘It’s not evident that a general recovery there will benefit Vodafone.’

Kitchenham is nonetheless reassured by the fact that ‘we’ve had a fair indication Vodafone is going to be a progressive dividend payer’.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Sponsored Video: Barings on investing in Frontier Markets


From Nigeria to Pakistan and from Kenya to Kuwait, frontier markets are catching investors' attention as never before.

More about this:

Look up the funds

  • Liontrust Macro Equity Income Fund - Acc (R)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Fidelity MoneyBuilder Dividend
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • CF Miton UK Value Opportunities Inst B Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Threadneedle UK Equity Alpha Inc Net Dist GBP
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Vodafone Group PLC (VOD.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • AstraZeneca PLC (AZN.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Rio Tinto PLC (RIO.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Barclays PLC (BARC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • BAE Systems PLC (BAES.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Legal & General Group PLC (LGEN.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Reed Elsevier PLC (REL.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • HSBC Holdings PLC (HSBA.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Liontrust Asset Management PLC (LIO.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Walker Crips Group PLC (WCW.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Royal Mail PLC (RMG.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • BT Group PLC (BT.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Dixons Retail PLC (DXNS.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Thomas Cook Group PLC (TCG.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • British Sky Broadcasting Group PLC (BSY.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Stephen Bailey
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Michael Clark
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • George Godber
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Richard Colwell
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet