Markets wait for Vodafone

Vodafone's chief executive Chris Gent hopes he can pleasantly surprise the markets

Investors are eagerly awaiting the half-year results from the world's largest mobile phone operator, Vodafone.

During recent months the TMT sector - technology, media and telecoms - has been out of favour with investors, and telecom shares had a particularly hard time on the stock markets.

Good results from Vodafone could turn around investor sentiment, while a disappointing result could trigger another wave of selling.

Telecom firms have been under pressure from two directions recently.

• The drop in the price of technology shares has robbed them of a cheap currency to fund future expansion, while
• the costs of licences for third generation mobile phones forced them to take on more debt than they would have liked to.

Mannesmann clouds the picture

Interpreting Vodafone's performance has been made extra difficult because of its £212bn merger with German telecoms giant Mannesmann in February.

The biggest merger in corporate history was supposed to give Vodafone a strong presence in those parts of Europe it did not reach.

But analysts worry that Mannesmann's D2 mobile network in Germany is finding it more expensive to sign up new subscribers than expected.

Price wars in the UK and elsewhere are hurting the bottom line as well, and like other operators Vodafone has seen its average revenues per subscriber fall by more than half during the past four years.

Industry watchers expect earnings to weigh in at between £3bn to £3.2bn, while pre-tax profits could amount to £2bn.

There are no comparable figures for 1999, because the company has changed so dramatically during the past year.

Some analysts actually argue that Vodafone's pace of acquisitions is so fast that they find it difficult to truly appreciate - or evaluate the company.

Waiting for Vizzavi

A lot may hinge on the performance of Vodafone's new internet portal, Vizzavi.

Designed as a multi-channel portal that provides users web access not just online, but through mobile phones and interactive television as well, the web site is deemed to have had a slow start.

Vodafone is running Vizzavi as a joint subsidiary together with its French partner Vivendi.