Shares of telecom giant Vodafone Group (GB:VOD) were down by 1.53% on Monday after the company announced the deal to sell its Hungarian business, with a cash deal worth £1.53 billion expected to close by the end of 2022.
The company will sell Vodafone Hungary to 4iG, a Budapest-based technology firm, and Corvinus, a state holding company.
The combined entity will be among the leading providers of telecommunications services in Hungary.
Vodafone is aiming to simplify its operations in Europe by focusing on key markets and increasing profitability.
The deal value is 2.5 times the revenues of the Vodafone Hungary business. This will help the company to clear some debt and improve shareholder returns.
Mounting investor’s pressure
Vodafone has been under pressure to consolidate its operations in Europe.
This deal came as a perfect response to calm the activist investor Cevian Capital, which acquired a stake in Vodafone Group in January 2022. Cevian wants the company to pursue more such deals to generate funds to strengthen the balance sheet and support falling share prices.
The company is also considering selling some of its stake in Vantage Towers, in which it owns an 81% stake. The company is looking for the right opportunity to execute this deal in sync with Cevian’s demands.
Is Vodafone Group a buy?
According to TipRanks’ analyst rating consensus, Vodafone Group stock is a Moderate Buy. This is based on ratings from 13 analysts, out of which seven are Buys, five are Hold and one is a Sell recommendation.
The Vodafone Group stock forecast is 154.23p, which shows an increase of 28.68% on the current price. The analyst’s price target has a high and low forecast of 110p and 225p, respectively.
Conclusion
The company is the leading service provider in Africa and is witnessing solid growth in the region.
With this deal and more expected in the future, the company will be able to focus more on growth markets and reduce dependency on mature markets where growth is stagnant.
