Vodafone Group Plc kept its sales growing in the three months to March and pressed ahead with plans to bring in new investors for its wireless towers next year. The shares rose as much as 5.3%.
The international mobile carrier reported organic service revenue growth of 1.6% in its financial fourth quarter, stronger than the 0.9% consensus of analyst estimates gathered by the company, and kept a final dividend of 4.5 euro cents.
It said a separate company being created for its roughly 58,000 mobile masts was on track to sell or list a stake in early 2021, as it set out a new goal of 1 billion euros ($1.1 billion) in annual cost savings within three years.
Chief Executive Officer Nick Read is trying to streamline the company’s operations and pay down debt after weak sales and heavy costs forced a surprise dividend cut a year ago. That’s as U.K. rivals consolidate around it and sales everywhere are dampened by the coronavirus.
Investors had been waiting to see if the virus might force another cut in shareholder payouts and disrupt Read’s plans to spin out the mast business, which analysts have valued at between 8 billion euros and more than 20 billion euros, depending on factors such as network sharing deals and debt.
The mast sale, and sales growth, might still come unstuck. Vodafone said the economic impact of the pandemic in its markets is “likely to be significant.”
Organic sales in Italy, Vodafone’s first major market to be hit by the virus, slid 3.7% in the quarter, slightly better than the 4.6% drop forecast by analysts. Spain fell 2.7%, beating the 5.5% forecast decline.
Vodafone shares were up 4.9% as of 8:11 a.m. in London, continuing a recovery that began in mid-March when they fell below 1 pound per share to a 23-year low.
Until Tuesday’s bounce, the shares have been underperforming their industry peers this year.
Of analysts surveyed by Bloomberg, 19 rated the stock a Buy, 5 a Hold and 2 a Sell.
Preparing for IPO
“We are preparing for a potential IPO in early calendar 2021, and we are targeting to provide financial information at our interim results in November 2020,” the Newbury, England-based company said in its results statement Tuesday.
The company also revealed writedowns of 1.7 billion euros for the year at its Spanish, Irish, Romanian and automotive units, citing competition in Spain and the economic turbulence caused by Covid-19.