Picture supply: Vodafone Group plc
Telecoms firm Vodafone (LSE: VOD) had usually appeared unloved by inventory market buyers in recent times. Issues have actually circled in 2025 although, with the Vodafone share value shifting up by 40%.
That also leaves it 22% beneath the place it stood 5 years in the past (and over 80% beneath the place it stood again in 2000!).
However this 12 months’s sturdy momentum has not come out of nowhere. I reckon there are some clear causes behind it. So ought I to take a position now within the hope of additional development within the Vodafone share value over the approaching 12 months and past?
Dividend development’s again, however from a decrease base
Vodafone cheered buyers this 12 months by asserting its first dividend improve in a few years. Nonetheless, that comes on prime of a painful dividend lower final 12 months. That has occurred on a number of events over the previous couple of a long time.
So what does the corporate’s dividend coverage sign to buyers? Seen positively, a rising dividend and obvious monetary self-discipline could possibly be seen as optimistic components for the share. The present dividend yield of 4.2% is effectively above the FTSE 100 common.
Long run although, Vodafone’s dividend per share is now a shadow of what it as soon as was. That underlines the difficult economics of the telecom enterprise, with giant licensing and infrastructure prices usually consuming closely into working income.
Cellular cash stays a robust story
This 12 months has seen the Airtel Africa share value soar 179%. Loads of the joy round that share has been due to its African-focused digital funds enterprise.
However Airtel Africa is just not the one FTSE 100 enterprise with a big and rising cell cash enterprise on the continent. Vodafone has a big footprint right here with a sizeable buyer base throughout a number of nations the place it is usually trying to develop its cell cash enterprise.
Within the first half of this 12 months, Vodafone had 94m monetary companies clients in Africa. Weakening foreign money charges ate into income development when translated from native billing currencies to the euro (Vodafone’s monetary reporting foreign money). I see that as an ongoing threat for Vodafone and we’ve got seen it problem Airtel Africa’s ops too.
Expressed in euros, Vodafone’s African enterprise revenues within the first half grew 7% year-on-year. I really see that as pretty unimpressive given the size of the chance, the expansion alternatives out there and Vodafone’s aggressive benefits that ought to assist it capitalise.
If the corporate can reach doing that and show its cell cash operation has substantial ongoing development potential, I believe that might propel the Vodafone share value increased in 2026.
A blended bag
As an investor, I proceed to have blended ideas about Vodafone. I like its sturdy place in lots of European and African markets, its confirmed money technology potential, and the scale of the cell cash alternative.
However the firm’s web debt grew within the first half and the long-term dividend file has been disappointing.
Nonetheless, the share value has the wind in its sails and I see some causes for ongoing optimism. The enterprise has quite a lot of substantial strengths I believe may doubtlessly justify a better valuation. I regard it as a share buyers ought to contemplate.
