In the last few weeks, investors have been focused on upcoming earnings from Vodafone (LON : VOD) as well as internal decisions. BT Group’s stock traded at 140p Wednesday. It was within the same range as it had been since 25 June. The stock has increased by more than 36% since its low point in April.
Vodafone’s share price was 70p. This is 6% lower than its high point of this year, but 13% higher than the YTD lowest.
Slow growth and turnaround works
In the last few years, telecom companies such as Vodafone and BT Group were under increasing pressure due to a slowdown in growth.
SeekingAlpha’s data shows that Vodafone has seen its annual revenues drop from $49.5 billion to $39.6 in the past financial year. BT Group revenues fell from $28 to $26 billion in the same time period.
The companies also spent billions upgrading to 5G, and this process will continue when the world moves to 6G. China is the first to implement 6G and the rest of the world will follow suit in the coming years.
The two companies therefore have adopted different strategies in order to attract investors. BT Group focused its efforts on cutting costs, particularly in the labor side. It announced it will cut 55,000 jobs up to 2030. The move is expected to save the company billions.
Vodafone’s approach is more holistic. In an effort to be a more leaner company, it has scaled back its global ambitions. It spun off its towers division into Vantage Towers, a publicly-traded company.
The company announced earlier this week that it had sold another 10% of its shares in the firm, netting 1.3 billion Euros. These funds will be used to reduce its debt mountain. The company sold shares worth 2.2 billion euro in the last two years.
Vodafone also took more steps to simplify the business. Zegona bought its Spanish operations for 4.1 billion euros. Swisscom bought its Italian operations for 8 billion euro.
Vodafone also works to consolidate its market share within its core countries. It is currently merging with Three its UK operations, a step that could boost the market share of BT’s EE.
Vodafone’s first-quarter earnings, which are scheduled to be released on Thursday, will likely have a significant impact on the share price. The numbers provided will give more information about the debt of Vodafone and its performance on Germany, which is its largest market.
BT Group also releases its Trading Statement on Thursday, 25th. It is generally believed that the group’s revenue in its first quarter fell slightly to PS5.13billion, while EBITDA grew to PS2billion. BT faces its biggest challenge in the business segment, whose expected revenue will be PS1.97billion. Analysts expect BT to have a revenue of PS20.9bn and an EBITDA of PS8.2bn for the entire year.
Vodafone Share Price Analysis
Vodafone Chart by TradingView
In the last few weeks, the VOD share price was in a narrow range. It has fallen from a year-to date high of 74.86p, in May, to its current 70p.
The exponential moving averages of 50 and 100 periods are consolidating. The stock formed a triangle pattern on the chart, as I’ve shown it in gren. The triangle formed after the stock rose from its low at 59.58p. This is what we call a “bullish flag”.
The stock is therefore likely to have a breakout bullish in the next few weeks. The stock will rise if this occurs, as buyers aim for the high year-to date of 74.86. If the company releases strong financial results, this view will become more pronounced. Vodafone’s 10.78% yield on its dividend is why it’s one of the top stocks for investors looking to earn income.
BT Share Price Analysis
TradingView BT Chart
BT Group’s stock has consolidated over the last few weeks. The price has not changed from 140p. The price of this product is just a few cents below its year-to date high, which was 145.95p.
The stock, like Vodafone has formed a pennant or bullish flag pattern which is close to its convergence levels. The stock has remained over the EMA of 100 periods. It is above the important support level of 135.95. This was its high in both May and December. The stock is therefore likely to have a breakout bullish after the financial results are published. It will then likely test the resistance level of 145.95p.
The post Why Vodafone and BT Group Shares are the Focus may change as new developments unfold.
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