Vodafone in a recently reported a decline in revenues for the first semester of the year with the telecommunications mogul continues to fight the backdrop of headwinds from southern Europe even as the company announced plans to invest a £7 billion in strengthening its existing network coverage by the year 2016.
Organic service revenue being the most accurate gauge that the market are taking when the basic assessing bottom line performance for the company reluctantly fell by almost 5 % in the second quarter which marked the acceleration from a 3.5 % decline during the first fiscal year. Moreover, adjustments in profit came later in at £5.7 billion.
Is Vodafone a targeted bid for AT & T?
Experts are speculating that the sale of Vodafone’s U.S. business to Verison is an indicator that the company is a targeted bid. Ever since rumours surfaced over a deal with Verison to trade Vodafone shares in the U.S., an agreement was finalised at $130 billion having rallied shares up to as high as 20 %. The higher than expected charge increased shareholders’ interest to jack up the stakes as the good result normally would, however there are additional motivations behind the 20 % increase in share price. Returning cash back to shareholders is the definitive key for motivation however there are still other viable options.
When large industry considers selling one of its vital components, the scent simply attracts investors. The U.S. sale has provided a much stronger cash base from which many investors will see the opportunity and the sentiment the U.S. sale sends out to the industry that Vodafone is pretty much sure that a deal is underway regardless if the outcome becomes outward or inward.
AT & T have long been reported to be keeping a good eye on Vodafone. Both companies are battling it out in a sticky patch with the European telecommunications sector still remain a ripe choice for consolidation. AT & T has long sought to extend its horizon into the European market and with Vodafone’s selling its major components is definitely a an irresistible merger of the two firms.
Still, AT & T is a U.S. based company and the timing of any deal in the near term is burdened with discrepancies of political difficulty. The recent spying scandals wherein the U.S. was blamed on political figures’ mobile phones is possibly seen as any deal with AT & T meeting political resistance.
Offence is the best form of defence. Vodafone must use this newly loaded profit to attack and seek out acquisitions of its own. Alongside the £7 billion worth of investment into the company’s network, Vodafone must seek other viable strategic acquisitions that strengthened its innovations and speed up cost of synergies in order that any further resistance in Europe does not continue to yank the ailing European economy in terms of profit margins.