Picture supply: Vodafone Group plc
Telecoms firm Vodafone (LSE: VOD) had usually appeared unloved by inventory market traders lately. Issues have actually rotated in 2025 although, with the Vodafone share worth transferring up by 40%.
That also leaves it 22% under the place it stood 5 years in the past (and over 80% under the place it stood again in 2000!).
However this yr’s sturdy momentum has not come out of nowhere. I reckon there are some clear causes behind it. So ought I to take a position now within the hope of additional progress within the Vodafone share worth over the approaching yr and past?
Dividend progress’s again, however from a decrease base
Vodafone cheered traders this yr by saying its first dividend improve in a few years. Nevertheless, that comes on high of a painful dividend reduce final yr. That has occurred on a number of events over the previous couple of a long time.
So what does the corporate’s dividend coverage sign to traders? Seen positively, a rising dividend and obvious monetary self-discipline might be seen as optimistic elements for the share. The present dividend yield of 4.2% is effectively above the FTSE 100 common.
Long term although, Vodafone’s dividend per share is now a shadow of what it as soon as was. That underlines the difficult economics of the telecom enterprise, with giant licensing and infrastructure prices usually consuming closely into working earnings.
Cell cash stays a powerful story
This yr has seen the Airtel Africa share worth soar 179%. Quite a lot of the joy round that share has been due to its African-focused digital funds enterprise.
However Airtel Africa is just not the one FTSE 100 enterprise with a big and rising cell cash enterprise on the continent. Vodafone has a big footprint right here with a sizeable buyer base throughout a number of nations the place it’s also seeking to develop its cell cash enterprise.
Within the first half of this yr, Vodafone had 94m monetary companies clients in Africa. Weakening forex charges ate into income progress when translated from native billing currencies to the euro (Vodafone’s monetary reporting forex). I see that as an ongoing threat for Vodafone and we’ve seen it problem Airtel Africa’s ops too.
Expressed in euros, Vodafone’s African enterprise revenues within the first half grew 7% year-on-year. I really see that as pretty unimpressive given the dimensions of the chance, the expansion alternatives out there and Vodafone’s aggressive benefits that ought to assist it capitalise.
If the corporate can achieve doing that and show its cell cash operation has substantial ongoing progress potential, I feel that might propel the Vodafone share worth larger in 2026.
A blended bag
As an investor, I proceed to have blended ideas about Vodafone. I like its sturdy place in lots of European and African markets, its confirmed money technology potential, and the dimensions of the cell cash alternative.
However the firm’s internet debt grew within the first half and the long-term dividend report has been disappointing.
Nonetheless, the share worth has the wind in its sails and I see some causes for ongoing optimism. The enterprise has a lot of substantial strengths I feel might probably justify the next valuation. I regard it as a share traders ought to contemplate.
