Vodafone is expected to report near flat revenue growth in the financial quarter that ended in June.
Analysts are ready for the company to announce revenue growth of just 0.6 to 0.7 per cent for its first quarter, compared to 2.3 per cent recorded in the previous three months (its fourth quarter) ending in March 2012.
According to CityWire, the company is significantly exposed to revenue declines in Europe, with Italy in particular expected to drag on sales. While the economic downturn will largely be blamed as the backdrop for poor performance, strong competition from other Italian operators will also be a deciding factor.
However, Vodafone's 45 per cent shareholding in Verizon Wireless will come to the rescue, said analysts at the financial services firm Liberum Capital. In line with the majority of other City of London brokers, Liberum workers describe Verizon Wireless as Vodafone's "star asset," one that will provide Vodafone with the means to pay shareholders another special dividend.
James Britton of Nomura said he expects Verizon Wireless will account for close to 60 per cent of Vodafone's earnings in its current financial year. "Vodafone's consolidated assets continue to outperform rivals but its key differentiation remains exposure to Verizon Wireless," he told CityWire.
Separately, Vodafone and KPN have signed a pilot agreement that will see their mobile operations in The Netherlands sharing tower infrastructure. The pilot project, which will run for several months starting in September, aims to decide for both firms whether network sharing can reduce costs and improve coverage, according to Telecoms.com.
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