Vodafone is feeling the heat ahead of its third-quarter earnings call

Vodafone Group PLC (LSE :VOD), has a high-stakes earnings conference ahead of it. Next Wednesday, management will reveal its third quarter results to shareholders.

British telecoms multinational, which is currently in financial trouble, has cut its full-year earnings, cash flow forecasts, and profits for last year. It blamed the global macroeconomic climate, rising fuel costs, and higher inflation.

The current forecast for adjusted EBITDAaL ranges between EUR15bn to EUR15.2bn (original guidance had a upside of EUR15.5bn). Adjusted cash flows are forecast at EUR5.1bn. This is a reduction from EUR5.3bn.

Any further downward revisions of these estimates would be terrible news next week, and the group faces serious problems.

Let’s count Vodafone’s fears:

The ship was a rudderless wreck with no chief executive to take over for Nick Read’s March departure

Mass exodus from activist investors (though the group’s largest institutional investor, e&, recently increased its stakes).

In an effort to save EUR1bn on costs, mass firings

Vantage Masts were partially sold, which allowed Vodafone to reduce its debt, but sent mixed signals to analysts

Vodafone’s partial sale Vantage Masts to Vodafone is good news for all except Vodafone

Despite these difficulties, analysts don’t always see Vodafone as an opportunity for investment.

Deutsche Bank feared that Vodafone’s bad luck might be over. It stated: “The current team are on the cusp monetising towers for highly attractive valuations, cutting down on deleveraging materially, and cutting costs to offset a rapidly reversing energy headwind, while also investing heavily and increasing prices.”

Although the bank retained a buy rating, it had a lower target price of 195p than previously (215p).

Vodafone’s attractive dividends are going to be a key focus on Wednesday. Vodafone’s attractive dividends are a popular choice for income portfolio investors. However, the VOD yield is above 8% and it has a low dividend coverage ratio. One wonders if this is sustainable.

Deutsche Bank seems unperturbed, saying: “Given energy price reversal/distributions, we see little justification for a dividend reduction even though one is more than discounted.”

Jefferies is more cautious, with a target share price at 85p and a rating of hold. This is due to the decline in revenue on the continent.

Jefferies’ full year guidance is below consensus. EBITDAaL forecasts at EUR14.85bn to the upside EUR14.48bn, and cash flows of EUR4.95bn to the upside.

Is Jefferies’ pessimism justified? We will find out on Wednesday, February 1st when Vodafone faces its shareholders.