Vodafone Group Plc (ADR) (VOD) Wants Growth of More Than $100 Billion

Vodafone Group Plc (NASDAQ:VOD) is the second-largest wireless company in the world behind China Mobile and the largest carrier in terms of the number of countries served. With the company’s recent earnings release, all eyes continue to be on Vodafone’s 45% stake in Verizon Wireless, which is 55% owned by Verizon Communications Inc. (NYSE:VZ).

Deal unlikely

Earlier in late April, Verizon Communications was preparing a possible $100 billion bid for Verizon Wireless’ remaining stake. According to the latest comment from Vodafone Group Plc (NASDAQ:VOD), however, the deal appears to be unlikely for the next two years. Analysts at Bernstein commented that Vodafone views Verizon Wireless as a more attractive asset than many of its European ones. While Verizon Communications may seek to withhold dividends in the near term, Vodafone does not consider it a real, sustainable threat as both companies rely on Verizon Wireless’ free cash flow.

AT&T Inc. (NYSE:T) and Verizon Wireless continue to dominate in the U.S. wireless market, controlling more than 70% of the market. In the latest period, AT&T added 296,000 customers who signed long-term service contracts while Verizon Wireless added 677,000 in new wireless contract customers in the first quarter. Looking forward, AT&T and Verizon Wireless will continue to battle hard on the 4G end, where Verizon Wireless currently has a wider coverage area while AT&T has delivered higher and more reliable connections.

Expansion continues

Despite declining revenue, the management continues to cut costs to achieve target earnings. The economy in Europe remains a challenge, but the outlook for newer markets in Africa, Asia and the Middle East remains bright. Vodafone Group Plc (NASDAQ:VOD) plans to retain the $3.19 billion dividend from Verizon Wireless this time to expand its network and spend on frequency auctions in growing markets such as India and South Africa. The company is also building a fast fiber network in Spain and Portugal while signing deals to share infrastructure with rivals in Germany and Spain.

On the positive end, by cracking the African model, Vodacom Group (65% owned by Vodafone), had seen full-year profit surged 23% as more customers bought smartphones. Vodacom is expected to expand into as many as three new countries by the end of next year.

Dividend

With its solid cash flow, Vodafone Group Plc (NASDAQ:VOD) increased its ordinary dividend by 7% for the full year. Moving forward, however, the company aims to maintain the ordinary dividend at current levels and commits continuously to the long-term investment needs of the business.