One Big Reason Why You Should Buy Vodafone Group plc Today

Vodafone’s (LSE: VOD) (NASDAQ: VOD.US) turnaround is far from complete; in fact, it has really only just started but the company’s management appears determined to return the company to growth.

Management is chasing growth by trying to make Vodafone the best at what it does. Indeed, across mainland Europe Vodafone is spending billions to upgrade its network and make it the best available, with the fastest transmissions and widest coverage. The company is also pursuing the same strategy here within the UK. 

Home comforts vod

Vodafone’s sales have been falling the UK for many years now and the company has finally decided to do something about it. Actually, profitability within the UK is among the lowest in mainland Europe’s dire economic situation . The company blames competition, regulation and the economic downturn for this poor performance within the UK.

So, Vodafone’s new UK chief executive has set out to change this. Jeroen Hoencamp, Vodafone UK’s CEO, has decided that the company will now develop a best-in-class network provider, offing unrivalled service across the country.

A key part of this strategy will be the provision of fixed-line broadband services, along with the company’s current mobile offering. What’s more, Vodafone UK will target business users and boost its enterprise business, which will use fixed-line networks as Vodafone’s business interests are not just limited to mobile telecommunications. All in all, the group is now focused on a ‘network first’ style growth strategy, building the best network to outperform peers and gain a reputation for reliability and quality of service.

This focus will see Vodafone provide mobile access for the first time to 100 communities across the UK by using high-spec femtocell technology, which means that only small base stations are required to provide 3G access. Further, Vodafone is planning to spend £1bn revamping its mobile network across the UK this year, connecting 259 cities and towns, as well as thousands of smaller communities to its 4G network. 

Part of a bigger plan

Vodafone’s spending within the UK is part of a wider, European spending drive to dominate the continent’s mobile telecommunications industry. As you may know, this project has been nicknamed Project Spring, a £19bn infrastructure project that will allow Vodafone to out manoeuvre its competitors. 

Just like the company’s UK plans, Project Spring will see Vodafone update its entire network across the continent, giving European customers unprecedented 4G access. According to the company’s own forecasts, Project Spring will generate an additional £1bn in free cash flow per annum for Vodafone, from 2019 onwards. 

Only time will tell

Still, only time will tell if Vodafone’s plan to become the best will pay off. However, Vodafone’s investors are being paid to wait, as at present levels the company currently offers a dividend yield of 5.4%.

Vodafone should be a core holding of any well-constructed dividend portfolio, allowing you to accumulate wealth steadily without having to worry about daily market movements. 

Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio.

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Rupert does not own shares in Vodafone.