Why Vodafone Group's Shares Have Been Climbing

LONDON -- The shares of Vodafone  (LSE: VOD  ) (NASDAQ: VOD  ) have rarely topped the 160 pence mark since November 2012, despite a 52-week high of 191.25 pence recorded in August. In fact, they sank to a 154.45 pence low at the end of last year.

However, this month has seen Vodafone's shares mount a small recovery, climbing to a high of 166 pence on Jan. 9. Today sees the shares up 2.4% from yesterday's close to 167 pence.

There are several factors behind the share-price climb, which I've outlined below:

  • The FTSE 100 has had positive start to 2013 -- when the market is on a bull run, its biggest constituents often follow suit; with the Footsie crossing the 6,000 mark at the beginning of the year, it has now broken through the 6,200-point barrier and has extended its two-month rally to 12%.
  • There have been reports in the media recently speculating that Vodafone may receive a bid for its U.S. operations, Verizon Wireless, from the co-owner of the joint venture, Verizon Communications. It's no secret that shares often rise in anticipation of a bid; however, they often drop if no deal transpires, of course. Watch this space...
  • Vodafone has held talks about cutting its workforce within its Spanish operation, where Vodafone is the second-largest operator by customers. This follows the company's 5.9 billion pound writedown of the value of its businesses in Spain, Italy, and Greece last November.
  • Talks are planned with Indian officials about the group's $2 billion tax dispute. Cases such as this are often off-putting for investors, and this one has hung around Vodafone's neck for a prolonged period of time. With a resolution seemingly imminent, interest in the company is creeping back as investors hope to get on board before the recovery speeds up.
  • The telecommunication group release its third-quarter results on Feb. 7, and reports suggest that Vodafone has circulated consensus forecasts ahead of its next update. Indeed, Goldman Sachs analysts believe that "Vodafone has attractive potential to materially improve its structural position by acquiring cable assets, and realising substantial potential synergies... selling a portion of its stake in Verizon Wireless to fund cable acquisitions would be accretive to long-term value with cautious execution assumptions."

So, is this the Vodafone recovery that private investors have been waiting for? Time will tell but, as a shareholder, I'll be keeping a firm eye on any news relating to the company over the next few weeks.

So, too, will City super-investor Neil Woodford, who owns a significant holding of Vodafone within his high-yield portfolios. His track record speaks for itself, having beaten the FTSE 100 by 200%-plus during the 15 years to October 2012 by identifying large-cap winners on a regular basis.

The Motley Fool has produced a special report on the eight blue-chip companies favored by Woodford, now updated for 2013. It's completely free, but available for a limited time only. Just click here to have the report delivered instantly to your inbox.


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