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VODAFONE

Analysis before buying or selling Vodafone shares

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Information on Vodafone shares
ISIN code: GB00BH4HKS39
Ticker: LON: VOD
Index or market: FTSE 100
 

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Elements to consider before selling or buying Vodafone shares

Analysis N°1

Concerning future opportunities to exploit, Vodafone could notably profit from an expansion into the mobile telephone market to develop smartphone sales worldwide and thereby increase its revenue.

Analysis N°2

The fact that Vodafone uses low cost technologies for its production could also enable it to sell more than its competitors with increased competitiveness. The group also targets the rural market for coming years which should enable it to acquire new parts of the market.

Analysis N°3

Concerning the threats that could cause a loss in the future profitability of Vodafone we particularly note the low prices of the new competitors that could affect the profit margins of the group. The market is also reaching saturation point concerning the subscription of new clients. Finally, the ability of transferring a mobile telephone number could also cause a loss of a certain number of the group’s clients.

Analysis before buying or selling Vodafone shares
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General presentation of Vodafone

The Vodafone Group is English; it is also the current world leader in mobile telecommunications. However its range of activities is actually quite diverse. The group’s turnover is mainly derived from mobile telephone services although 15% of this is from fixed telephone services providing telephone and internet access.

Although the major part of its activity occurs in Europe, particularly Germany and the United Kingdom, Vodafone’s market also touches Africa, Asia and other areas.

The major competitors of Vodafone

We now provide a little more information about Vodafone's business environment with an overview of its main competitors:

AT&T

This company is currently the largest provider of local and long-distance telephone services in the United States and the second largest in mobile services. It is now one of the largest companies in the world and one of the leaders in this sector internationally.

Telefonica

This other company, this time Spanish, is a multinational telecommunications company. It is present in Europe and Latin America and operates 44 million fixed lines, 19 million of which are in Spain, and more than 54 million mobile telephone subscribers. It is also the largest shareholder in the Internet portal Terra Networks. Telefonica is thus one of the most important telecommunications companies in the world and the third largest in terms of number of customers.

Deutsche Telekom

This company is currently the German and European leader in the telecommunications sector. It is a former subsidiary of the state monopoly Deutsche Bundespost, which was privatised and split into three parts in 1996. Deutsche Telekom is active in three main business areas, including telecommunications, the sale of mobile handsets, accessories and telecommunications equipment, and information and communication systems.

Verizon Communications

This group is an American company in the telecommunications sector which is present in the mobile segment with Verizon Wireless, the fixed-line segment in the United States with Verizon Telecom, the business segment with Verizon Business and internationally thanks to its numerous subsidiaries and holdings. The company's headquarters are in New York.

Orange

Finally, the French company Orange is also a serious competitor to Vodafone. It specialises in telecommunications and has over 266 million customers worldwide. The company is currently also the leading or second largest operator in more than 75% of the European countries in which it operates, as well as in 83% of the African and Middle Eastern countries in which it offers its services.


The major partners of Vodafone

Microsoft

In 2003, Vodafone signed a partnership with HP, Microsoft and Extended Systems in order to offer its professional clients VPIM solutions.

SFR

In 2016, SFR Numericable announced that it could continue the partnership which it had established in 2002 with Vodafone, at least until 2020. This deal touched on the pooling of leadership as well as both of the companies' expertise in order to cater to the needs of French and foreign multinationals regarding telecommunications.

Liberty Global company

Finally, in 2017, Vodafone finalised its partnership with the Liberty Global company in view of a joint venture based in the Netherlands which will be owned in equal shares by both companies and which will be named VodafoneZiggo Group.

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Positive factors for Vodafone shares
The factors in favour of a rise in the Vodafone share price:

To assist you in making your decisions concerning the bullish or bearish strategy you should take on the Vodafone share price, particularly if you are thinking of holding these positions over the long term, we recommend you first learn more in detail about the strengths and weaknesses of this company. Let us start here with this group’s strong points that could promote a rise in this company’s share price.

Firstly, and despite a weak visibility in Europe, the Vodafone Group benefits from a strong position throughout the rest of the world. It is in fact one of the largest and most popular mobile telecommunications service providers worldwide which is of course its greatest advantage. Vodafone can particularly count on this strong visibility with a well planned marketing campaign supporting a strong brand. Of course Vodafone has heavily invested in advertising and communication with popular companies such as ZooZoo which has increased the popularity of this brand particularly with the younger generation. In total, there are over 470 million clients that use Vodafone services throughout the world in over 150 different countries.

The group can also count on its workforce of over one million workers spread throughout the world. The diversity of products and services offered by this company is of course another advantage against the competition with a varied range covering sectors including mobile telecommunications, fixed telecommunications and digital television. The company works in these various sectors to achieve its turnover. Vodafone also offers specific valuable services such as payment options through m-Pesa, mobile telephone health services, and basic services that we will not itemise here that do however widen its reach and respond to certain requirements of its clientele. The group also supplies films, music and other media through its dedicated applications which also provide another source of revenue.  

Vodafone has invested heavily in its online services with a very well designed website that particularly enables easy online payments and recharges as well as the activation and deactivation of certain services.

We also note that Vodafone has invested in major sporting events worldwide that have contributed to additional visibility that have enabled the company to gain in popularity.

Negative factors for Vodafone shares
The factors in favour of a drop in the Vodafone share price:

Although Vodafone benefits from numerous strong points that enable it to increase its profitability at present and should assist its share price to rise on the stock markets it also has certain weak points that should be taken into account when preparing your financial analyses of this asset. Here therefore are the weak points of this company.

Firstly, given the international status of the Vodafone brand, this company is particularly followed by the commercial authorities worldwide; this leaves no room for mistakes and requires the company to constantly adapt to different regulations and updated legislation.

The basic competition that currently leads in the telecommunications market is also a notable weak point for this company. Due to this Vodafone is required to fight to keep its market share against competitors that often attract clients through low prices on their products and services thereby obliging Vodafone to be increasingly competitive.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.
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