But they did have a small 1% rise pencilled in for the following year, and with full-year guidance having now been raised, the chances are that that will be beaten.
Vodafones big problem has been rapidly-falling service revenues in its mature European markets with competition and regulation, and the economic slump making people more cost-conscious, you just cant coin it the way you used to. But we heard on 11 November that the service revenue slide is slowing, and that falls of 3.4%, 9.7% and 3% in Germany, Italy and the UK were better than expected.
In the first quarter, Italy had been down as much as 16%, but chief executive Vittorio Colao did say at the time that our performance is beginning to stabilise quarter-on-quarter in several of our European markets, and increasing 4G uptake was helping compensate for the poor performances from old-fashioned networks.
4G on target
This time, Mr Colao told us that in 18 months the company should have achieved 90% 4G coverage in Europe, and that should go a long way towards a return to growth and Vodafones optimism was reinforced by a 2% rise in the first-half dividend, to 3.6p.
Pre-results forecasts had Vodafone shares on a P/E of 36, but thats during a turnaround phase when massive reinvestment in new networks is being made so much so that the expected full-year dividend of around 11.3p per share would only be around half covered by earnings, with Vodafone stumping up the rest from its reserves. And with the shares currently priced around 221p, the dividend would yield 5.5%.
To get down to a more sustainable long-term P/E of around the FTSE 100s average of 14, wed need to see EPS more than double to to 15.7p.
Is that achievable? Well, it would still be below March 2014s EPS figure of 17.5p, and it would leave the predicted dividend still on weak cover of only around 1.4 times. With dividends rising, that suggests Vodafone is confident of achieving significantly better growth than that over the next few years and I wouldnt be surprised to see EPS growth of a few percentage points better than current forecasts by March 2016.
Brokers seem to think so too, with 13 out of 26 urging us to Buy while only three think we should Sell.
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