Morningstar Rating

Stock Research and Analysis

by Allan C. Nichols, CFA

Bulls Say

Vodafone has sold its stake in Verizon Wireless and distributed about 71% of the proceeds to shareholders. Vodafone is left with a stronger balance sheet and increased focus on operations it controls. India, in particular, is showing signs of improvement.
The firm generates significant free cash flow, which it is using to increase dividends, make acquisitions, and reinvest in the business.
Vodafone acquired Kabel Deutschland, increasing its position in offering converged telecom services as well as reducing cost. Read more 

Bears Say

Competition is increasing globally. European rivals are merging and becoming more global, and strong emerging-markets players are developing. This competition is driving down ARPU.
Vodafone could overpay for more acquisitions like Kabel Deutschland.
The Indian government is a thorn in Vodafone's side. After the Indian Supreme Court ruled in Vodafone's favor regarding its $2.5 billion tax dispute with the Indian government for its acquisition of Hutchison Essar in 2007, the government proposed a new law retroactive to 1962, which could require the firm to pay the tax. Read more 

Management

Vittorio Colao replaced Arun Sarin, who retired in 2009, as CEO after serving as CEO of Europe and deputy CEO for Vodafone. Previously he was CEO of RSC MediaGroup, a leading publisher in Milan, a position he took after leading Omnitel Pronto Italia   Read more 

Profile

With 419.4 million proportional customers (total customers multiplied by its ownership interest), Vodafone is one of the largest wireless phone companies in the world. It   Read more 

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