* H1 results due on Nov. 9
* Investors keen for news about portfolio streamlining
By Kate Holton
LONDON, Nov 4 (Reuters) - Vodafone (VOD.L) investors will be looking for further signs that the group will dispose of minority stakes and return much of the proceeds to shareholders when it reports first-half results and updates its strategy.
Shares in the mobile operator have risen more than 16 percent since it announced in July it planned to update its strategy, with much of the gain coming since it sold its 3.2 percent stake in China Mobile (0941.HK) for $6.6 billion in September. [ID:nTOE68702E]
Investors, some of whom complained that Vodafone’s strategy of owning non-strategic minority assets weighed on the group’s overall value, will be hoping for something similar with regard to Vodafone’s presence in France and Poland.
“It is not an accident that the Vodafone share price has performed so well since the China Mobile deal and its shareholder remuneration were announced,” Bernstein analyst Robin Bienenstock said.
“The company’s decision to use 70 percent of the proceeds for a share buyback and the rest to pay down debt addressed one of the largest issues facing Vodafone — scepticism over portfolio management and allocation of capital.”
News of Vodafone’s strategy review followed investor calls for a shake-up at the board and came before a small rebellion at its annual general meeting over its recent performance.
Vodafone’s 44 percent stake in SFR, its French joint venture with Vivendi (VIV.PA), and its near 25 percent stake in Poland’s Polkomtel are likely to be sold next, analysts and bankers believe. [ID:nLDE69I0QM]
The Polish unit is complicated by the nature of the ownership, and any sale to Vivendi will come down to tough price negotiations, meaning most analysts will look for an indication of the company’s intentions rather than any immediate progress.
“Although we expect concrete progress in asset disposals only later this year or early next year, the strategy update should increase confidence in further measures and thus have a positive effect,” UniCredit analyst Thomas Friedrich said.
It is expected to keep its most prized asset, a 45 percent stake in No. 1 U.S. mobile service Verizon Wireless. It can only sell to majority partner Verizon (VZ.N), which has indicated the unit could start paying a dividend from 2012. [ID:nN23147421]
It also also likely to keep a 4.4 percent stake in Bharti Airtel (BRTI.BO) because the stock is illiquid and hard to sell.
Investors will also be looking for details on how Vodafone intends to keep the provision of data services profitable despite ongoing requirements for network upgrades.
Away from the strategy, Vodafone will also have to deliver solid first-half results with improving trends in Europe after better-than-expected trading from peers including France Telecom FTE.PA and KPN (KPN.AS).
Investors and analysts will be looking for strong growth from the sale of data services, such as accessing the Internet, and signs of improvement in European markets including Spain, whose construction sector collapse caused Vodafone problems.
Analysts expect it report earnings before interest, tax, depreciation and amortisation of 7.29 billion pounds, down from 7.5 billion a year earlier, on revenue of 22.33 billion pounds, slightly above the 21.8 billion pounds posted in 2009, according to a Thomson Reuters I/B/E/S poll of eight brokers. (Editing by Michael Shields)