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Are Vodafone's troubles over?
There are good reasons why the U.K. operator's shares have fallen 35% over the past year. Its earnings for the half-year that ended in March were down more than 70% year over year. That's mainly due to poor results in its core European markets, such as Spain and Turkey, where the company has taken massive impairment charges during the past year. In Spain, Vodafone's market share is now expected to drop to 28% by 2013 -- 3.5 percentage points lower than its current share, and far less than previous forecasts, according to IE Market Research.
But while Europe remains a challenge for Vodafone, its recent results don't fully account for the phenomenal rise of the euro versus the pound, which translates into higher earnings for the British company. Despite a recent rally, the pound has lost roughly 10% of its value against the euro, and has been weak against most other currencies as well.
That boost could continue as European consumer confidence picks up, with one survey showing the best readings since November. Meanwhile, the British economy continues to suffer from underconfidence and a possible downgrade of the U.K.'s government debt. A strong euro should help Vodafone's European business hold its own during tough times.
It's not just about forex
More importantly, Vodafone is putting its best foot forward elsewhere in the world. Down under, Vodafone Australia's recent merger with the Australian operations of rival Hutchison Telecommunications
Moreover, Vodafone's joint venture with Verizon
With a 6.3% trailing dividend yield, Vodafone ranks among the favorite dividend-paying picks for the 135,000-plus Motley Fool CAPS members. Its shares are still down some 5% for 2009, even as much of the market looks increasingly overbought.
In the telecom space, Vodafone may have little of the glamorous appeal that Sprint Nextel