Vodafone Group, Plc (VOD) is based in the United Kingdom and engaged in telecommunication services throughout Europe and internationally, with mobile operations in 26 countries, notes Marty Fridson, dividend specialist and editor of Fridson/Forbes Income Securities Investor.

Together with its 30 partners, VOD has mobile networks in 46 countries. Mobile services enable customers to call, text, and access data. The firm also provides fixed-line services, including broadband and super WiFi, television, as well as voice and convergence services.

VOD is a leading provider of services to large and multinational businesses, plus small and medium businesses, as well as the international public sector. The company offers private cloud services, cloud-based applications, and products for securing networks and devices.

We last reviewed the company in January 2019, and downgraded our recommendation to Hold. The change in recommendation was driven by the increased risk of a dividend cut on the heels of the company’s $22 billion partial acquisition of Liberty Global (LBTYA).

Although VOD did indeed adjust its dividend modestly lower, the company’s dividend now appears stable, despite economic softness, which may pressure the firm’s earnings picture in 2023.

Investment grade debt ratings reflect VOD’s large size, geographic diversification, and strong market position. The company’s successful convergence strategy to expand its fixed broadband assets in Europe has demonstrated operational synergies.

VOD reported 1H fiscal 2023 profit for the period ended 09/30/22 of €€986.0 million, essentially flat with the year-earlier comparable period. Adjusted 1H net income for the fiscal 2023 period was €1.689 billion or 6.02 eurocents per share, matching analysts’ estimates and up from 4.90 eurocents a year ago.

Operating income grew 12% year-over-year to €2.94 billion. Nonetheless, the company slightly lowered its full-year guidance against the backdrop of rising interest rates and inflationary pressures. With this update we are changing our recommendation to Buy from Hold, but lowering our fair value price to $18.50.

Subscribe to Fridson/Forbes Income Securities Investor here…