Shares in Vodafone were among the best performers on a lacklustre FTSE 100 on Friday after transatlantic bid speculation returned to one of the most widely held stocks on the index.
The stock rose 1.2 per cent to 205p after several reports said AT&T was making detailed preparations for a bid for Vodafone – with some saying any such offer could be priced at 300p a share in cash.
There has been sporadic talk that Vodafone could face bid interest after its $130bn sale of its stake in Verizon Wireless last September, after which it returned £51bn of the receipts to its investors. In January, the last time bid speculation peaked, AT&T ruled out making a bid for Vodafone for six months in line with UK takeover rules. It is now free to revisit a potential offer.
Vodafone, an early pioneer of mobile telephone services which now faces growing rivalry from internet-based communications providers, revealed a 4.4 per cent fall in group-wide revenues of £10.2bn in the quarter to June 30 the last time it filed results. Service revenues from its European operations were the laggard, falling 7.9 per cent in the period.
In an analysis on the company published on Thursday, Citigroup said it expected the quarter to represent “a low point for service revenue growth”.
But the broker also singled out the pressure Vodafone faces from new forms of competition for revenue ahead of expected new product launches from iPhone maker Apple: “Given the apparent impact of Apple’s iMessage on their text volumes, [mobile phone] operators have reason to fear automatic routing of customers’ voice calls via Apple’s FaceTime, should that be its intention.”
Trading volume in the stock was notably high, with more than 20m Vodafone shares changing hands in early Friday trade.
Tony Cross, market analyst at Trustnet Direct, said: “Right now the market is showing some signs that it believes a move from AT&T may be imminent.
“Vodafone’s share price hasn’t exactly excelled of late – it’s underperformed the FTSE 100 by 15 per cent over the past six months so there’s definitely scope to see some value here. But at the same time questions are being asked about where the upside benefits lie.”
Overall, London’s main equities index stayed neutral, in cautious trade as investors waited for a sense of direction from Janet Yellen, chairwoman of the Federal Reserve, who is due to give a hotly anticipated speech at the annual symposium of central bankers at Jackson Hole, Wyoming.
Ms Yellen is expected to shed new light on the potential timing of a US rate rise with her remarks on the labour market, an important part of the Fed’s thinking on monetary policy.
The FTSE 100 started the day up 0.1 per cent at 6,783.88, a gain of 6 points.
Shares in the London Stock Exchange were 1.1 per cent lower at £19.84 after the operator of the market confirmed it would raise £938m through a rights issue to fund part of its purchase of Frank Russell Investments. It also posted a 40 per cent jump in pre-tax profit for the three months ended in June.
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