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Technology Stocks : Vodafone (VOD) -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (78)	6/4/1999 1:27:00 PM
From: MrGreenJeans	Read Replies (1) \| Respond to of 109

It's Beginning to look a lot like Christmas... Friday June 4, 11:52 am Eastern Time International arms to lift Vodafone profits By Kirstin Ridley LONDON, June 4 (Reuters) - A booming overseas portfolio and cash from the sale of a stake in satellite group Globalstar should boost annual profits at British cellphone market leader Vodafone Group Plc by around 400 million pounds, analysts say. Awaiting completion this summer of Vodafone's $62 billion merger with AirTouch Communications Inc(NYSE:ATI - news) to create the world's biggest mobile phone company, analysts are pencilling in annual, pre-tax profits of between 872 and 916 million pounds. The forecasts for Tuesday's results, which include a 65 million pound exceptional gain following the reduction to 3.14 from 5.15 percent in Vodafone's Globalstar stake, compares with 650.2 million last year. Dividends are expected to climb to 6.4p from 5.53p. Despite exponential domestic subscriber growth, Vodafone's profits are being driven increasingly from its fast-growing overseas interests that stretch from France, Germany, Sweden, Greece, the Netherlands and Malta to Australia, Fiji, Uganda and South Africa. Although UK operations have been accounting for around 60 percent of operating profits, domestic earnings are expected to remain almost flat at around 585 million pounds as a rising tide of new customers take up less lucrative, pre-paid packages. Pre-paid tariffs, when consumers buy their call minutes in advance to avoid nasty bill surprises, account for around 70 percent of new subscribers in Britain. These customers generate close to 160 pounds per year each for Vodafone -- compared with about 750 pounds per year for high spending business clients. Despite the lack of growth in domestic earnings, the company has tripled the number of new UK subscribers to 2.1 million during the year -- compared with 600,000 in the previous year. But rapid growth comes at a price. Signing up each new customers is estimated to cost around 98 pounds in marketing costs and subsidies. ''To maintain your profits when you've added more than triple the number of subscribers is no mean feat,'' noted one analyst. Overseas divisions -- which some analysts now value at more than 16 billion pounds -- are all expected to break into profit, apart from E-Plus in Germany. Experts expect the businesses to more than double revenues to over 1.5 billion pounds and generate operating profits of around 300-345 million pounds. Analysts say international operations now account for more than 50 percent of Vodafone's valuation. The stock market darling was trading eight pence weaker at 1,198p on Friday afternoon. Most analysts view weakness as a buying opportunity. ABN AMRO Hoare Govett says Vodafone should be capable of growing EBITDA (earnings before interest, tax, depreciation and amortisation) at a compound rate of 35 percent per year over the next three years and tips a share price target of 16 pounds ahead of the merger. A merged Vodafone AirTouch will be the world's sixth largest telecoms operator, a giant that will eclipse British Telecommunication (quote from Yahoo! UK & Ireland: BT.L) with a value of around 67 billion pounds. Given the underweight position of European investors, analysts are braced for significant index-led buying before the end of the year. Vodafone accounts for around 2.9 percent of London's top FTSE 100 index. The new entity will account for 5.9 percent.