From an Unknown Source
Vodafone AirTouch (VOD, 270p) continues to consolidate its leadership in the mobile telecomms marketplace, strengthened by a crucial upgrading of its debt position by US credit agency, Standard & Poor (S&P). The US debt agency yesterday raised its ratings to single-'A' from single-'A'-minus, and increased its short-term rating to single-'A' from single-'A'- minus. S&P said that its outlook for the company was stable, and it has removed Vodafone from its CreditWatch list. The upgrade vindicates Vodafone's strategy. The agency said that Vodafone's credit profile has strengthened materially by the $36.5bn sale of Orange to France Telecom, and by its decision to use those funds for debt reduction and reinvestment. The issues of 3G licence costs, debt and longterm revenues are plaguing the telecoms sector, but S&P believes that Vodafone is strategically positioned for strong revenues and profits growth. The news flow looks good. Vodafone has won a key UK government contract, believed to be worth about 90m over two years, while its Mannesmann Telecommunications division reported sparkling H1 results. Earnings before interest and tax were up 58% to 1.8bn euro, on sales up 138% to 6.8bn euro. Consolidation of Italian operators Omnitel and Infostrada, where revenues also grew, contributed 96% of the growth in total sales. This may not be the time to be overly-reliant on telecomms, but they are key to maintaining a balanced portfolio. At only 270p, Vodafone looks undervalued. BUY |
