Telecommunications is a service which many of us would struggle to live without. A utility which is used by roughly 63% of the world’s population. Vodafone (LON: VOD) connects almost 500m of those mobile users, many of them in the emerging markets. It makes more than €40bn a year from repeated, reliable service revenue. Maintaining sales requires little operating expenditure meaning the group is able to convert huge amounts of its profits into cash and is therefore a generous dividend payer.
|2014 (£bn)||2015 (£bn)||2016 (€bn)||2017 (€bn)||2018 (€bn)|
|Operating Cash Flow||6.23||9.72||10.5||14.2||13.6|
|Free Cash Flow||4.41||1.09||1.27||4.06||5.42|
Those are all qualities which would, ordinarily make Vodafone a solid investment in times of economic uncertainty. Indeed, its share price recovered quickly in the wake of the 2008 financial crisis as many investors sought its defensive, income paying qualities.
But Vodafone’s value has fallen 37% in the last year and its shares now sit at five-year lows. Why? Because people…
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