Back to top

Analyst Blog

British mobile phone giant Vodafone Group Plc (VOD - Analyst Report) expects to incur costs worth £500 million ($809 million) over the next four years for the integration of Cable & Wireless Worldwide. The company acquired Cable & Wireless Worldwide in July this year for £1.04 billion.

The deal is part of Vodafone’s future growth strategies that hinge on five components. It includes increasing mobile data services, enlarging growth in enterprise segments, expanding growth in emerging markets including Eastern Europe, India and Africa, growing in new areas and maintaining liquid investment in quality networks.

Over the next few years, mobile data expansion will be the key growth driver for both Vodafone and the industry at large. The company is accelerating its investments in faster networks to boost smartphone sales and increase data traffic. Further, Vodafone aims to establish a differentiated network across all its regions through a combined focus on quality networks, IT and partners network sharing.

The Cable & Wireless acquisition would enhance its enterprise business, leading to strength in mobile, fixed and cloud services. Given the rising demand for Internet on cell phones, the deal would provide high-capacity fiber network to offload streaming video and other bandwidth services from the mobile network. As a result, this would minimize the company’s need for additional capacity that it takes on lease from third parties such as BT Group plc (BT - Snapshot Report), thereby lowering costs.

Overall, the transaction will bring in high network integration benefits with quantifiable cost savings. The merger is expected to deliver cash flow synergies of £150-200 million per year by March 2016 on full integration with free cash flow of £250-300 million in March 2016.

We are maintaining our long-term Neutral recommendation on Vodafone. The stock retains a Zacks #3 (Hold) Rank for the short term (1-3 months).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%
AROTECH COR… ARTX 3.78 +5.59%