Two years ago, Vodafone was down in the dumps and had several challenges to deal with:
Vodafone's acquisition of Liberty Global PLC Class A (NASDAQ: LBTYA)'s German/central Eastern European added so much debt, even a cut to its dividend cut would not free up resources to invest in organic growth.
In Spain, Vodafone was being squeezed by MasMovil's single/dual-play pricing.
Vodafone needed to start making investments in 5G, but couldn’t service their debt.
Vodafone was cash strapped, but needed to keep up with the competition’s deployment of 5G. Due to spectrum cost and falling revenue, out of desperation, they slashed its full-year dividend by 40%. It was the first cut since the company introduced dividend payments in 1990.
But a year ago things started to turn around. The company saw organic growth in key markets like Turkey, Egypt, and Germany. The company also announced reaching a deal to share 5G equipment with Telecom Italia, creating a jointly owned tower company into a new company that they planned to spin off.
Last month, Vodafone invited the big banks to make their case for a role on the planned initial public offering of its European towers unit, which could raise more than $2 billion, with the new company expected to generate about 900 million euros of annual EBITDA.
UBS and Morgan Stanley are expected to organise the lucrative listing of Vodafone's European towers unit - a deal that could value the entire business at up to 16 billion euros ($18 billion), sources familiar with the matter said.
Vodafone said last year it wanted to carve out its mobile masts in Europe into a new company worth upwards of 18 billion euros, with a view to listing a minority stake.
The new entity will include Vodafone's stake in Italian mobile tower group INWIT, three of the sources said, adding the London-based firm was working to transfer its INWIT interests into the new business.
One of the sources said Vodafone's towers business was expected to have an enterprise value of 12 to 16 billion euros.
Today, I noticed usual options activity in Vodafone. The Smart Money bought over 40,000 call options at the $17 strike price that expires on 8/21.
If the Smart Money is going to be right, price needs to break out of range.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
