After snapping up Kabel Deutschland and Spains Ono last year,Vodafone(LSE: VOD) is back on the hunt for acquisitions in Europe.
It has been reported that Vodafone is holding early talks regarding the purchase ofPortuguese cable business Caboviso fromFrench telecoms groupAltice. Altice is currently in process of taking overPortugal Telecom.Under the terms of the deal between and Portugal Telecom and Altice, the French company is required to divest itsPortuguese businesses Oni and Caboviso.
Caboviso provides pay television, fixed internet access and telephony services for consumers, while Oni provides similar services to business customers. However, its reported that Vodafone is only interested inCaboviso, although analysts believe that Vodafone could bid for both businesses.
The acquisition of the two companies would give Vodafone access to an additional 2m customers across Portugal. With an additional 2m customers, Vodafones share of the Portuguese telecoms market would jump from 10% to 16%.
Returning to growth
Vodafones desire to expand its presence in Portugal is part of the companys plan to reignite its European sales.
Indeed, Europe has been a problem area for Vodafone over the past four or five years. Reversing the trend of declining sales is a top priority for the group.
Luckily, Vodafones drive to boost its European business is paying off. During the three months to the end of December, European sales declines slowedyear-on-year.
Whats more, Vodafones hefty multi-billion pound investment in its European infrastructure is starting to pay off. Figures show that during the last quarter of 2014, customer demand for mobile data and 4G services across Europe increased.
Time to buy?
European service revenue accounts for around 70% of Vodafones group service revenue, so the region is strategically important to the company. And as Vodafones European sales start to stabilise, it could be time to buy the companys shares.
Declining European revenues have held back Vodafones growth over the past few years. But withthe European market showing signs of life, City analysts have already started to factor regional growth into their forecasts.
For example, analysts believe that as a recovery in European sales takes hold, Vodafones earnings per share will jump by 20% during 2017.
Moreover, after 2017 its believed that Vodafones Project Spring organic investment programme will really start to boost the companys bottom line.
Its estimated that the improvements made by the Project Spring investment programme will customers towards Vodafone in Europe. These additional customers will increase group cash flow by an estimated 1bn per annum from 2019 onwards.
Further, the additional income generated from Vodafones enlarged European customer base will push earnings higher and give the company room to increase its dividend payout.
That said, with a dividend yield of 5.1% at present levels, Vodafone is already one the most attractive income stocks around.
And if it’s income you’re looking for, our top analysts have put together thisnewfree reporttitled”How To Create Dividends For Life“which is designed to help you discover the market’s best income stocks.
What’s more, for a limited time onlyyou can gettwo reports in one. Along with “How To Create Dividends For Life”, we’re throwing in a new report entitled “My 5 Golden Rules for Building a Dividend Portfolio”.
Justclick hereto download the free report double pack today!
A Bigger Piece Of A 4 Billion Pie?
This fast-growing pharmaceutical business could be all set to become a potential blockbuster.
Recent approvals in Europe and Japan of its latest niche drug means it can now tap a market worth an estimated 4bn a year potentially doubling its sales in the process.
Thats just one of the reasons why our Motley Fool analysts think this under-the-radar innovator could be among the big winners of tomorrow.
To find out more, click here to download this FREE small-cap report now