The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Vodafone's virtues fail to convince

Investors like growth and they like dividends. So why isn't Vodafone on a premium rating?

The global mobile phone operator hasn't just forecast high single-digit growth in sales next year. It also expects to hold its profit margins and to freeze its capital expenditure. That should allow it to increase an already attractive dividend.

Yet its shares trade on a forward P/E ratio of just 13. That's about the same rating as the broad UK stock market.

A fear of falling

Investors seem to be preoccupied with two risks. One is that Vodafone won't be able to sustain its growth for long. The other is that its profit margins will actually fall.

Vodafone's growth forecasts depend on its winning new customers, rather than squeezing more revenue out of existing ones. So far, this has worked surprisingly well. The company has expanded in emerging markets while bolstering market share elsewhere.

But there are limits. Vodafone's market share gains, particularly in Germany and Spain, are likely to provoke a fight-back. Its main competitors in these markets, T-Mobile and Telefónica respectively, are now growing so slowly that they are likely to respond sooner or later.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree