Since selling its share of joint venture Verizon Wireless, Vodafone’s (LSE: VOD) (NASDAQ: VOD.US) performance has failed to impress investors. Sales have fallen, dragging down the company’s profits and share price.
However, there are three catalysts ahead that could reignite Vodafone’s fortunes.
Delightful dividend 
One of Vodafone’s most attractive qualities is the company’s dividend payout. At present levels Vodafone supports a dividend yield of 5.2% and City estimates are calling for this yield to hit 5.4% next year, followed by 5.6% during 2016.
Nevertheless, Vodafone’s higher than average dividend yield suggests to me that the City believes that the payout is unsustainable at present levels.
Actually, Vodafone is only expected to report earnings per share of 6.6p next year, while the dividend payout will cost the company 11.4p per share. Unfortunately, it would appear as if Vodafone’s dividend is bigger than the company can afford.
That said, if Vodafone’s management can convince the City that the payout is in fact here to stay, then it’s likely that the company will see its share price rise as a result.
European troubles
Europe has been the root cause of Vodafone’s troubles during the past few years. European revenues have been sliding as peers grab market share and economic troubles force customers to opt for cheaper alternatives.
Revenue within Vodafone’s European market fell 7.9% on an organic basis during the first half of this year, with some markets reporting double-digit declines in service revenue.
Nevertheless, if Vodafone can reverse its fortunes within Europe then the company’s sales should reverse their slide. Management is proactive on this front, building the company’s presence on the continent through acquisitions and hefty infrastructure investment as part of Project Spring. The goal is to make Vodafone one of Europe’s best mobile service providers.
Over the long-term, Vodafone’s infrastructure investment and the company’s integrated product offering across Europe should draw customers. But with the unemployment rate standing at just under 12% across the Eurozone, Vodafone’s sales won’t start rising until the European economy recovers.
Take over
Finally, there is still a chance that a larger peer could make an offer for Vodafone. Indeed, only recently rumours have resurfaced suggesting that US telecoms giant, AT&T and Japanese giant Softbank could be looking at Vodafone.
During the past few days reports have suggested that Softbank was planning to takeover Vodafone, while rumors regarding AT&T’s interest have been around for some time. However, AT&T’s management has stated that the company does not want to acquire Vodafone in its entirety. Instead, it is suspected that AT&T will work with a partner to break-up and then acquire separate parts of Vodafone.
Specifically, it’s suspected that AT&T will only want to acquire Vodafone’s European operations, which could allow Vodafone could kill two birds with one stone. Indeed, if Vodafone could offload its European division to AT&T, the company would not have to worry about kick starting growth on the continent. AT&T could be working with Softbank to acquire separate parts of Vodafone.
Still, I should state that as of yet, there have been no definitive takeover talks between Vodafone, AT&T and Softbank.
Only time will tell
Vodafone’s recovery will take time, although with that hefty 5.2% dividend yield, investors will be paid to wait.
Nevertheless, if it’s growth you’re looking for, there are other opportunities out there. The key, when searching for growth stocks, is looking under the radar. You want to get on board while the company is still an unknown quantity.
