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(Alliance News) - Telecommunications firm Vodafone said Friday an initial public offering of newly formed Vantage Towers is on track for 2021.
Vodafone also reported first quarter earnings, saying the coronavirus crisis hurt organic service revenue growth due to lower revenue from roaming and visitors, project delays and lower prepaid revenue in some smaller markets.
For the first quarter ended June 30, total revenue slipped 1.4% to EUR10.5 billion from EUR10.6 billion in the first quarter of financial 2020 and was down 2.8% on an organic basis. Service revenue rose 1.3% to EUR9.1 billion from EUR9.0 billion, though was down 1.3% on an organic basis.
Vodafone said it was on track to deliver at least EUR0.4 billion net operational expenditure reduction in Europe in financial 2021 and adjusted EBITDA outlook unchanged, remaining "flat to slightly down". It reiterated its guidance for full-year free cash flow of at least EUR5.0 billion.
"Our trading performance in the first quarter demonstrates the relative resilience of our operating model and focused delivery of our strategic priorities. Whilst we have seen the direct impact on our revenue from travel restrictions and business project delays, we have also seen increased usage in voice and data, alongside record NGN broadband customer net additions in Europe," said Chief Executive Nick Read.
Vodafone also said it will list its infrastructure business as Vantage Towers in Frankfurt next year. Vantage Towers is "Europe's leading tower infrastructure platform", Vodafone said, with over 68,000 towers across 9 markets.
Vantage Towers also will own a 33.2% equity stake in Infrastrutture Wireless Italiane Spa, known as Inwit, with co-control rights under the terms of its shareholder agreement with Telecom Italia.
Vodafone added that it potentially will include in Vantage Towers its 50% stake in Cornerstone Telecommunications Infrastructure Ltd, the leading tower infrastructure company in the UK with 14,300 towers.
Vodafone said Vantage Towers has a senior management team is fully in place, led by CEO Vivek Badrinath and Chief Financial Officer Thomas Reisten.
"We have a strong platform to capture growth opportunities in connectivity across Europe, leveraging our long-term arrangements with leading operators. Today I am also pleased to announce the merger of Vodafone's and Wind Hellas' towers businesses in Greece, which creates the leading tower infrastructure company in Greece," Badrinath said.
Vodafone shares were down 1.4% early Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.1% at 6,140.58
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Hang Seng: down 2.3% at 24,671.37
Nikkei 225: Tokyo market closed for holiday
DJIA: closed down 353.51 points, or 1.3%, at 26,652.33
S&P 500: closed down 1.2% at 3,235.66
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GBP: soft at USD1.2743 (USD1.2752)
EUR: up at USD1.1612 (USD1.1597)
Gold: down at USD1,886.27 per ounce (USD1,894.10)
Oil (Brent): down at USD43.27 a barrel (USD44.02)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
Japan Health & Sports Day holiday. Financial markets closed.
0930 BST UK CIPS-Markit flash UK purchasing managers index for manufacturing and services
0930 CEST Germany flash PMI
1000 CEST EU eurozone flash PMI
0945 EDT US flash manufacturing and services PMI
1000 EDT US new residential sales
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UK retail sales were recovering in June as lockdown measure eased following the sharp falls experienced since the start of the coronavirus crisis, the Office for National Statistics said. UK retail sales were down 1.6% in June on an annual basis, having decreased 13% in May. Market consensus, according to FXStreet, was for a 6.4% annual decline. On a monthly basis, UK retail sales were up 14% in June, having jumped 12% in May. The reading easily beat market consensus for an 8.0% rise.
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UK employers' ability to make hiring and investment decisions is now improving for the first time since February, the Recruitment & Employment Confederation said, as lockdown eases. However, REC warned that business confidence in the wider economy remains weak. The latest JobsOutlook survey found that employers' confidence in making hiring and investment decisions rose to a net level of positive 4 in the first half of July, up from negative 9 in June, and indicates that on balance, employers think the outlook has improved from the previous month. Businesses' hiring intentions have also improved between June and July. Forecast demand for permanent staff in the short term now sits at positive 14, up from positive 6 in early June.
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UK households' determination to save money during the coronavirus lockdown may have helped to bolster their confidence in their own future personal finances, an index suggests. GfK's index, which measures consumers' confidence in their own finances as well as the wider economy, found people have become slightly less downbeat about their own "future wallet" in recent weeks. There was a three-point increase in consumers' expectations for the financial position of their households in the next 12 months, which moved from a score of minus three in a previous survey published on July 3 to zero in the latest research. People's attitudes towards making major purchases deteriorated. When asked, in view of the general economic situation, if they think now is the right time to make major purchases such as furniture or electrical goods, the score on this measure was minus 26, down from minus 25 previously.
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BROKER RATING CHANGES
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BARCLAYS CUTS M&G TO 'UNDERWEIGHT' ('EQUAL WEIGHT') - TARGET 189 (202) PENCE
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BARCLAYS RAISES PHOENIX GROUP TO 'OVERWEIGHT' (EQUAL WEIGHT) - TARGET 793 (658) PENCE
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BARCLAYS CUTS JUST GROUP TO 'EQUAL WEIGHT' (OVERWEIGHT) - TARGET 60 (66) PENCE
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COMPANIES - FTSE 100
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Education publisher Pearson said Covid-19 has dealt a major blow to trading, but was encouraged by the improving trends and pick up in sales in June. In the six months to June 30, sales decreased by 18% to GBP1.49 billion from GBP1.83 billion last year, with portfolio adjustments reducing sales by GBP53 million and currency movements increasing revenue by GBP25 million. Pearson's first-half operating profit rose to GBP107 million from GBP37 million, the increase largely due to the gain on sale of Penguin Random House, it said. Pretax profit rose to GBP35 million from GBP13 million last year. Pearson said the group sales decline largely reflects test centre and school closures in Global Assessment and International due to Covid-19. After deterioration from March to May, Pearson saw improving sales trends in June as lockdowns eased. Pearson declared an interim dividend of 6.0p, unchanged from last year.
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COMPANIES - FTSE 250
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Centrica has agreed to sell its North American energy supply, services and trading business, Direct Energy, to NRG Energy for USD3.6 billion in cash. It said this represented a 7.9 times multiple of enterprise value to underlying adjusted earnings before interest, tax, depreciation and amortisation. The energy supplier said the disposal increases the long-term strength of its balance sheet with proceeds intended to be used to reduce net debt significantly and to make a contribution to the defined benefit pension schemes. Centrica added it will focus on its core home markets of the UK and Ireland, where it has "leading market positions". Separately, Centrica said it delivered a resilient performance overall against the backdrop of Covid-19. For the six months to June 30, revenue fell to GBP10.70 billion from GBP11.57 billion last year and its pretax loss narrowed to GBP264 million from GBP569 million. It declared no interim dividend, having paid out 1.5p last year.
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COMPANIES - GLOBAL
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Walt Disney announced the coronavirus pandemic has forced it to indefinitely postpone the release of big-budget film Mulan, while pushing back upcoming installments of Star Wars and Avatar by a year. The live-action Mulan had already been postponed twice, with its release most recently delayed to August 21. Following the postponement of Tenet, a sci-fi thriller that theater operators were counting on to jump-start attendance, it appears the summer film calendar is collapsing. Disney had decided in early April to push back a dozen Marvel films, including Black Widow, starring Scarlett Johansson. That is now scheduled to come out November 6, forcing all the other films in the franchise to shift back.
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Friday's Shareholder Meetings
Nostra Terra Oil & Gas Co PLC - AGM
Renold PLC - AGM
Surface Transforms PLC - AGM
Kingfisher PLC - AGM
Arkle Resources PLC - AGM
Bahamas Petroleum Co - AGM
Ascent Resources PLC - AGM
Remote Monitored Systems PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
