Vodafone Shares Hit 30 Year Low But Growth Prospects Signal Buying Opportunity

Vodafone’s recent strategic manoeuvres under CEO Margherita Della Valle’s leadership have positioned the telecommunications giant for a potential turnaround, despite shares trading near three-decade lows. The centrepiece of this transformation is a £16.5 billion merger with Three in the UK market, complemented by strategic exits from challenging Italian and Spanish operations.

The market’s current valuation of Vodafone appears overly pessimistic, with an enterprise value of approximately five times forecast earnings—the lowest multiple in six years. This presents an attractive entry point for investors, particularly considering the company’s strengthening fundamentals and strategic positioning.

The Three merger catapults Vodafone to become Britain’s largest mobile operator, commanding a 27-million-strong user base and overtaking both BT’s EE and O2. This enhanced scale creates opportunities for network investment, customer acquisition, and expansion into the mobile virtual network operator space, where Vodafone has historically maintained a modest 10 per cent market share.

Cost efficiencies from the merger are expected to generate annual synergies of £700 million by 2030. The African operations continue to demonstrate robust growth, with organic service revenue surging 12.6 per cent in the latest half-year period. Della Valle has projected sustained earnings growth, guiding adjusted earnings between €11 billion and €11.3 billion, including €400 million from the merger.

While challenges persist in the German market, where legislative changes have impacted revenue, these headwinds are expected to dissipate by Q3 2025. The dividend has been reset to 4.5 cents per share, yielding an attractive 5.1 per cent at current prices. Net debt has been reduced to €22.4 billion, with leverage at a comfortable 2.4 times adjusted earnings post-merger and buyback.

The combination of strategic repositioning, cost synergies, and growth initiatives, coupled with an unusually low valuation, suggests significant upside potential for Vodafone shares. The company’s strong balance sheet and clear path to earnings growth make it a compelling investment opportunity at current levels.