Vodafone Group Plc (VOD.L) (VOD.O) could benefit from a merger with Liberty Global Plc (LBTYA.O), according to a report in Barron's, which added the British telecommunications company's shares could also be poised for a 33 percent rise.
A Vodafone merger with the cable group would "yield considerable strategic and financial benefits," said the financial newspaper, which describes Liberty Global Chairman John Malone as a "shareholder-focused deal maker" who may be inclined to pursue such a deal "if terms can be worked out."
Vodafone has already said it was no longer in talks with Liberty, Barron's said, but the two companies have partnered on a joint venture in the Netherlands.
Vodafone did not immediately respond to a request for comment, while a Liberty Global spokesman declined to comment.
The company's shares could rise for other reasons too, the newspaper said. Vodafone has managed to increase its revenue in Europe in recent quarters after eight years of decline. While competition and regulations in the European market are difficult, conditions seem to have stabilized. The company has also invested $28 billion over the past two years to improve its network.
The company's operations in India, South Africa and other developing markets are "unappreciated," the report said, adding those markets accounted for a third of Vodafone sales.
The company's more than 5 percent yield compares favorably with rivals Verizon Communications Inc (VZ.N), AT&T Inc (T.N) and Deutsche Telekom AG (DTEGn.DE), as well as measly British government bond rates, according to Barron's. The company, which has American depositary receipts that trade in the United States, expects its cash flow to grow enough to cover the dividends it pays out.
(Reporting by Trevor Hunnicutt in New York; Editing by Peter Cooney)