Vodafone’s (VOD) incoming chief executive, Nick Read, is hoping his “very active summer” of strategic planning will help spark a change in investor sentiment. Speaking at a Goldman Sachs conference in New York, Mr Read reassured analysts that he’s still confident the group can hit its €17bn (£15bn) free-cash-flow target over the next three financial years, meaning there should be plenty of capital to cover the dividend. Spiralling net debt and an uptick in mobile network costs have led to concerns about the sustainability of investor income, and the share price has fallen 28 per cent since the start of the year.
Over time, management plans to reduce net debt which has risen to €31bn, or three times adjusted cash profits (Ebitda) in the wake of the Liberty Global deal. Cost cutting thanks to new digital initiatives is expected to boost Ebitda, despite a slowdown in revenue growth, while the disposal of assets could increase the cash position. That includes the potential sale of the group’s telecoms towers which Barclays has estimated could fetch €12bn.
Mr Read also reassured that the heavily indebted Indian subsidiary is “ring-fenced” and won’t absorb any more capital from the wider group. The division completed its merger with peer Idea Cellular in August. Further disposals or deals in the non-core portfolio should be expected in the near term, including a potential IPO of the New Zealand business.
