Market Report: Vodafone has to wait for US payout
It has been almost 12 months since Vodafone learnt that, after six dry years, it would finally be getting a dividend from its US joint venture Verizon Wireless, and the market is impatient for more. Yesterday, however, investors were having to come to terms with the fact that they will have to wait a little bit longer to find out whether the next chunk of cash is on its way.
With Verizon Communications – Vodafone's partner in the business and the one in charge of the purse strings – announcing its results yesterday, hopes were high that this would be an opportunity for a new payout to be announced. What the City got instead was an admission from the US giant's finance chief, Fran Shammo, that the subject of a dividend was not even expected to be discussed at next week's board meeting.
That knocked Vodafone back as low as 181.35p during trading, and although the mobile phones giant did manage a partial recovery, by the time the bell rang its share price was still 2.15p lower at 183.05p.
Dealers weren't getting too worried, however, saying they were still confident over the chances of a new payout being approved. They also highlighted that Vodafone's share price has been on the rise recently, with the company – which today unveils its first-quarter results – having jumped more than 11 per cent in two months.
It was another strong day for the FTSE 100, which closed 28.42 points better off at 5,714.19 to set a new two-and-a-half month high. The US reporting season was helping the top-tier index advance, while poor economic data from the States and a tough Spanish bond auction were shrugged off.
Irish building materials group CRH was in the red following reports from India claiming it is interested in the cement business of Jaiprakash Associates, the construction company which developed the country's Formula One track.
The talk was that a deal could end up being worth up to $1.6bn (£1bn), although Goodbody's Robert Eason pointed out the group's recent sale of its stake in Portugal's Secil meant CRH "has plenty of financial headroom". Nonetheless, the stock was pushed back 9p to 1,204p, with CRH also hurt by Exane BNP Paribas cutting its rating to "neutral".
Elsewhere among the energy groups, Royal Dutch Shell crept down 2.5p to 2,298p. Dealers highlighted the continuing presence of vague speculation it may be interested in a move for Maurel et Prom, although the boss of the French oil company dismissed such rumours last month. Shell was also the subject of a Bloomberg report claiming it is in talks with Anadarko over potentially buying the US group's Mozambique gas assets.
On the 10th anniversary of its listing, luxury brand Burberry rose 57p to 1,289p, pushed up by French peer Hermes' results coming in ahead of expectations.
The London Stock Exchange enjoyed a late move as bid speculation made a return around the bourse, which closed 21p better off at 1,023p on the FTSE 250. Frequently the subject of takeover whispers, the latest rumours put forward the Singapore Stock Exchange as a possible suitor, with a potential price being suggested of 1,350p a pop, although traders treated the tale with a heavy dose of salt.
Having recommended the stock as a buy for nearly two years, Bank of America Merrill Lynch's analysts announced they were downgrading TalkTalk's rating to "neutral". They were quick to point out this "does not mean that we have 'lost faith' in the company", although this didn't stop the broadband provider retreating 7.1p to 182.7p.
Kurdistan oil explorers were in focus, with Afren spurting up 9.1p to 128p after a promising update from its Simrit well. Not that the pessimists at Liberum Capital were happy – citing the current complications involved with operating in the autonomous region of Iraq, they warned that "in the absence of exports options and with a limited domestic market, the value is unclear".
Meanwhile, on Aim, fellow Kurdistan-driller Gulf Keystone Petroleum climbed 8.75p to 221p as it announced a further resources upgrade to its Shaikan field.
After the bell, small-cap digital radio group Sepura (down 0.5p to 70.5p) announced that – citing "substantial institutional demand" – four major shareholders had decided to sell a total of nearly 11 million shares.
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