Vodafone sales hit by strong competition

As Vodafone updates the market Graham Spooner, investment research analyst at The Share Centre, explains what it could mean for investors.

Vodafone sales hit by strong competition

Vodafone’s European and African operations helped drive Q3 service revenues, beating analysts’ forecasts, but the company has warned that tough competition in India and the UK will cause full year earnings to fall at the lower end of expectations. Organic revenue growth was reported to grow by 1.7% in the quarter.

Vodafone has updated its full year guidance confirming that it expects free cash flow of at least €4bn and organic earnings before interest tax and depreciation to be in the 3%-6% range, as uncertainty in its India operation is mitigated by Africa and Europe.

There has already been a fair bit of merger and acquisition activity in the sector over the last year as rivals consolidate and offer quad-play services (telephone, TV, broadband and mobile), and Vodafone will need to do the same to help drive earnings forward.

Investors will be hoping that plans to merge its Indian subsidiary with Idea Cellular, announced on Monday, will bear fruit.

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