Vodafone's share price has climbed to levels not seen since early 2018, buoyed by a turnaround strategy that is showing tangible results. The stock recently traded at 125.10p, marking a 130% recovery from its 2024 trough, and technical indicators hint at more room to run.
Turnaround strategy gains traction
The telecom giant has reshaped its portfolio through a series of divestitures and acquisitions. Sales of its Italian and Spanish operations generated over €12 billion, allowing management to focus on core markets like Germany and the UK. In a landmark move, Vodafone acquired Three UK, creating VodafoneThree, a formidable competitor to BT's EE. It also increased its stake in Kenya's Safaricom.
Cost-cutting measures, including significant layoffs, have been implemented to improve profitability. The company is now exploring a UK TV service to challenge Sky, BT, and Virgin Media O2. The goal is to cross-sell TV to its existing broadband and mobile customer base, aiming to more than double broadband customers to 4.3 million by 2034. The head of VodafoneThree noted that customers are asking for TV, making it a natural addition.
However, entering the TV market is capital-intensive, a factor that led BT to sell part of its TV business to Warner Bros Discovery. Vodafone's recent results, however, underscore the strategy's effectiveness.
Financial performance improves
In the first fiscal quarter, revenue rose to €8.62 billion, up from €7.8 billion a year earlier, driven by strong performance in Africa and Turkey. Germany, its largest market, contributed €2.7 billion, a 1.9% year-over-year increase, while UK revenue reached €1.98 billion.
Technical outlook points higher
On the weekly chart, Vodafone shares have been in a robust uptrend, rallying from a low of 54.62p in 2024 to a high of 127p. The stock recently broke above the key resistance at 119.75p, its May high, and remains above the 50-day and 100-day exponential moving averages. The Relative Strength Index (RSI) has moved above 50 and is trending upward, indicating bullish momentum.
Given these signals, the next target is the 135.55p resistance level, which marked the January 2018 peak. A decisive move above that could confirm further gains. Investors may also be watching broader market trends, such as stocks shrugging off oil and geopolitical worries, which could support risk appetite.
While the technical picture is constructive, the TV venture's costs and competitive pressures remain risks. The company's ability to execute its cross-selling strategy will be key to sustaining the rally. For context, rate hike expectations and yield movements can influence telecom valuations, but Vodafone's operational momentum appears to be the primary driver.
As the turnaround continues, investors will watch for further progress in Germany and the UK, as well as the successful integration of Three. The stock's technical strength suggests that the market is pricing in continued improvement.
This article is for informational purposes only and does not constitute financial advice.
