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What's going on?
Vodafone, the worlds second-largest mobile operator, reported half-year earnings on Tuesday that soundly beat market expectations. It also said that it would earn more profit this financial year than it previously thought and the stock made its biggest jump in over two years.
What does this mean?
Vodafones premium numbers are largely thanks to its data and broadband offering. According to its CEO, customers are flocking to Vodafone given the strength of its networks and its generous data subscription packages, which are easing customers usual fears of running out of data each month.
On top of that, the company is continuing to grow key measures of revenue, cut costs and lower its total debt, even while it spends money on expanding its network infrastructure in Europe. All of this must have rang out just right for investors, who sent the stock up over 5% on Tuesday.
Why should I care?
For markets: Investors seem to be buying into the current outlook for Vodafone.
Vodafone was one of the strongest performers on UK stock markets on Tuesday, and its shares are finally recovering previous heights, after a brief slide following concerns about its profitability earlier this year. As its outlook improves, it looks more like Vodafone wont need to spend money acquiring a smaller network provider in order to profitably expand in European markets, as some had thought which is good for the companys bottom line.
The bigger picture: Vodafone seems to recognize a losing battle…
One part of Vodafones new success story seems to be leaving behind one of the international markets where it has had a sizable footprint: India. Competition with Indian telecoms providers like Jio, which are undercutting Vodafone with extremely low prices, is tough. Vodafone has effectively sold its Indian operations to Idea Cellular, and it recently sold its cell towers there as well.
Originally posted as part of the Finimize daily email.
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