Vodafone commits to dividend

Vodafone’s decision follows a dividend cut last year from 15¢ to 9¢ a share, which it has maintained at the same level. Yet the group should not have to dig too deep into its pockets this year: free cash flow grew by more than a tenth to €4.9bn (£4.3bn) in 2020. Pre-tax return on capital employed rose from 5.3 per cent to 6.1 per cent, which it attributed to growth in adjusted cash profits, digital transformation and improving asset utilisation. 

However, net debt ballooned by more than half to €42.2bn, or 2.8 times adjusted cash profits, driven in part by the purchase of Liberty Global assets, which were consolidated from August 2019. Management added that the monetisation of European TowerCo was on track for early 2021, which should help to reduce leverage. The group is also prioritising its digital transformation plan, which helped to generate €0.4bn of net operating cost savings in 2020. It has therefore accelerated its ambitions for digital, with a new three-year plan that aims to deliver over €1bn net cost savings. 

The group has inevitably been impacted by coronavirus, with roaming data usage down as much as three-quarters due to reduced international travel. While business in Germany has proved resilient, which accounts for a third of the group's adjusted cash profits, it has seen a more significant impact on performance in Spain. The corporate division is experiencing some payment delays for small- and medium-sized enterprises, as well as slower decisions on projects for large businesses. 

Analysts at Goldman Sachs forecast revenues of €44.9bn and EPS of 4ȼ in 2021, compared with €43.7 and 3ȼ in 2019.