The series of cost reduction programmes being implemented by Vodafone are at last influencing financial analysts to look more positively on the company's future.
Nomura broker, James Britton, is now predicting the company's 2010 operating profit two per cent ahead of consensus at £12 billion, with £12.5 billion forecast for 2011 and 2012, five per cent ahead of market expectations.
"Strong cost reductions should drive organic earnings before interest, taxes, depreciation and amortization inflexion in the second half (+2 per cent year-on-year) and in the 2012 financial year (+2.8 per cent) though the step-up in customer investment still distorts first half margin," said Britton.
Supporting this bullish outlook, Paul Marsch of Berenberg Bank, also pointed towards the likely resumption of a high dividend payment from Vodafone during 2012-13.
"In our view, Vodafone shares are nowhere near adequately discounting this prospect, which could result in the Vodafone dividend growing by 75 per cent over the next four years," he said, adding that this would justify a share price of 200p.
According to Marsch, Verizon Wireless could afford to pay a special one-off dividend of up to US$50 billion in the medium term. "Such a move would reduce the capital gains tax base for Vodafone and could presage an eventual exit," he said.
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