Citi rings the changes at Vodafone

Citi, which has a ‘buy’ recommendation on the London-listed stock and a price target of 185.0p, said: “We see ongoing improvement in service revenue growth from the fourth quarter onwards, and on a better quality mix: Europe is set to drive the recovery, while Turkey/Egypt should slow down.”

Analysts Georgios Ierodiaconou and Rohit Modi continued: “Shame the market doesn’t seem to focus on EBITDA – with €400m of annual savings coming from digitalisation and other savings on top, Vodafone EBITDA growth is well supported in the coming interims [and] years.

“Yes, group EBITDA can have contributions from [emerging markets], and that can be skewed by inflation and lost in translation. But focusing on Europe, we expect around 3.5% EBITDA growth in the company years.”

In November, Vodafone – which last summer acquired German and Eastern European Liberty Global in a €22bn deal – reported narrowed interim pre-tax losses of €511.0m, compared to a €2.8bn loss a year earlier. Turnover was flat at €21.9bn.

The company has been hit by problems in its India joint venture, Vodafone Idea, which is facing an uncertain future after a Supreme Court ruled it must pay retrospective penalties of $4bn. Vodafone has a 45% stake in Vodafone Idea, which has around 300m users.

Shares in Vodafone were ahead nearly 1% at 148.24p by 1400 GMT.