Vodafone share price begins recovery after markets spooked by revenue restatement

Vodafone's stock price began to recover this morning (Monday), after falling 2 per cent by close of trading on Friday when the company announced changes to the way it reports revenue.

The UK-headquartered operator advised financial analysts that it is no longer including revenue from the sale of cable access to operators offering international voice calls in its results, and has restated its earnings for the past eight quarters to account for the change, the Financial Times reported.

Vodafone said the move will give a clearer picture of the underlying trends in its earnings and would have no impact on its overall service revenue figure, but the announcement "spooked" investors and caused the drop in the company's share price, the FT noted.

The operator's stock price had recovered by 0.74 per cent by midday BST on Monday, according to the London Stock Exchange.

The FT added that Vodafone UK was particularly hard hit by the restated figures, which showed the business contracted in the final two quarters of Vodafone's fiscal year 2015--the 12 months to end-March--on an organic basis. Earnings in fiscal Q3 2015 fell by 1.4 percentage points, with fiscal Q4 down by 1.2 percentage points, the FT said.

In a research note, Merrill Lynch analysts said that the restated figures showed Vodafone's UK business has "stalled" and that overall group earnings are unlikely to recover until the back half of the year, the FT reported.

The Merrill Lynch analysts were concerned by Vodafone's ability to compete in the field of converged services, the Telegraph reported.

Vodafone's confirmation in June that it is discussing a potential asset swap with cable operator Liberty Global offered the Merrill Lynch team some comfort, the Telegraph added.

Liberty Global is reportedly still pursuing a full merger with Vodafone, with discussions running in parallel to talks regarding an asset swap. A merger would seek to create a new European multi-service giant, combining Vodafone's extensive wireless network with Liberty Global's cable infrastructure.

For more:
- see this Financial Times article (sub. req.)
- view this Telegraph report

Related articles:
Operators under pressure to innovate as EC signals end of roaming fees
Vodafone UK picks MVNE Digitalk to support MVNO business
Vodafone partnership boosts Uros' global mobile Wi-Fi network service
Vodafone enters UK consumer broadband market with Vodafone Connect
Vodafone-Liberty Global merger rumours continue to rumble