First-half year results from Vodafone (VOD), which helped the share price to strong gains on 13 November, tell us one thing loud and clear. This is a story where little else matters outside the dividend.

A typical sea of adjustments and footnotes, new chief executive Nick Read’s ambition is to clean up and simplify the company and how it presents its performance but Vodafone is evidently still a work in progress.

It may be one of the world’s largest mobile network companies but to be a shareholder through 2018 has been a thoroughly miserable experience. In January the share price changed hands at 238p, so at the price they traded at before the interims – 144.36p – it had lost 40% of its value in 2018.

By contrast, the FTSE 100 was down just 7% over the same period making Vodafone’s shabby performance abundantly clear.

Even at the current 155p, it’s still an ugly year-to-date performance and arguably even more staggering given that this is a FTSE 100 mega-cap valued at more than £41bn even at today’s depressed levels.

MODEST ENCOURAGEMENT

Vodafone was able to hand investors some cheer by nudging up full year guidance, even if that relies on a new swathe of cost cuts and efficiencies rather than any real improvement to how the business is trading.

Yet the only thing that really matters to investors in Vodafone is that it can keep spewing out hefty dividends. Fears of a cut to that payout have weighed heavily on the minds of investors with many presuming, so far incorrectly, that with a new man at the top a re-basing of expectations was coming.

That it hasn’t so far is a sop for the optimists. But given the current debt pile of €31bn and costly new 5G spectrum licences to be funded, we wonder for how long.

A forward yield of nearly 9% suggests the market remains sceptical on the sustainability of the dividend. (SF)

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