European markets steadily recovering

The recovery over at Vodafone’s critical European operations continues to rattle along nicely thanks to a combination of improving consumer spending power and massive organic investment. The London firm advised last week that “more of our European businesses are returning to growth,” and a 1.5% decline in organic service revenues during April-June indicates the vast strides made over the past year — Vodafone saw European revenues droop 4.7% during the 12 months to March.

The mobile operator’s £19bn Project Spring project to improve its 4G footprint is helping to resuscitate customer demand, and Vodafone’s network now covers three-quarters of Europe versus just 32% less than two years ago. With this huge investment also boosting its retail presence and improving network reliability, continental customers look likely to continue voting with their feet.

Debts on the rise

Still, in the near term, the costs of Project Spring are casting concerns over Vodafone’s balance sheet. Net debt registered at a colossal £22.3bn as of March, up from £13.7bn in the prior year, with the £5.8bn acquisition of Spanish broadband provider Ono and purchase of various spectrum licences weighing heavily on the firm’s financial health.

Although Vodafone has long spoilt its investors with above-average dividend yields, concerns abound that the London business will subsequently struggle to keep its progressive payout scheme on track. The City currently expects the mobile giant to shell out dividends of 11.6p per share in both 2016 and 2017, yielding an impressive 4.9%. But with rewards expected to continue outstripping projected earnings during this period, many are questioning whether these forecasts are realistic.

Growth levers keep on delivering

However, more bullish investors will point to Vodafone’s terrific growth levers — and subsequently bubbly profits outlook — as a reason for the telecoms leviathan to keep its brilliant dividend policy in place. Firstly its Kabel Deutschland acquisition, and aforementioned purchase of Ono last year, has built a solid base in the multi-services entertainment sphere, while discussions over asset swaps with Liberty Global could bolster its position here further.

And Vodafone’s impressive momentum in emerging regions also promises massive riches. The company saw organic revenues in the Africa, Middle East and Asia Pacific (AMAP) region sprint 6.1% higher during April-June, and insatiable data demand in India — responsible for four-tenths of the regional total — drove revenues here 6.9% higher. Against this bubbly backdrop I fully expect both earnings and dividends to gallop higher in the years ahead.

The post Why You Should — And Shouldn’t — Invest In Vodafone Group plc appeared first on The Motley Fool UK.

One stock that could help you to do so is Vodafone (LSE: VOD). It has benefitted considerably from improved investor sentiment in the last year, during which time its shares have risen by an impressive 19%. That’s despite the Eurozone, which is a key market for Vodafone, having endured a very challenging period, with slow-growth still being a reality and fears surrounding a possible Grexit causing share prices for companies operating in the region to come under a degree of pressure.

Clearly, though, Vodafone has held up relatively well and this bodes well for its long term future. That’s because, even while Europe is struggling, Vodafone continues to offer capital gain potential and, looking ahead to next year, it is expected to post a rise in earnings of 18%. That would be hugely impressive given the challenges that Vodafone faces with regard to increasing competition in the UK mobile market and the aforementioned problems in Europe. As such, with the prospects for Europe in the long run being relatively bright, Vodafone could see its financial and share price performance exceed current expectations.

Meanwhile, UK construction continues to be a boom sector, with continued low interest rates set to lead to high demand for services provided by companies such as Kier (LSE: KIE). In fact, Kier is forecast to increase its bottom line by 19% in the current year, followed by 12% next year. This means that in 2016 its profit could be as much as a third higher than it was last year, which could cause investor sentiment in the stock to rise.

And, with Kier having a price to earnings growth (PEG) ratio of just 1.1, there is plenty of scope for an upward rerating. Furthermore, a dividend yield of 4.4% means that Kier appears to offer a potent mix of growth, value and income potential, with today’s contract win for the development of Smart motorways yet another positive piece of news flow for the company.

However, not all stocks may help you to reach retirement more quickly. Certainly, Young & Co (LSE: YNGA) has a very sound business model and a bright future, but its current valuation appears to more than adequately take this into account. In fact, Young & Co trades on a price to earnings (P/E) ratio of 22.6, which is relatively high, and yet is forecast to increase its bottom line at a rather modest pace over the next couple of years.

For example, earnings in 2016 are set to be 6% higher than last year, while in 2017 the rise is forecast to be just 4%. As such, Young & Co has a PEG ratio of 5, which appears to be too high to warrant investment at the present time.

The post Can Vodafone Group plc, Kier Group plc And Young & Co.’s Brewery plc Help You Retire Early? appeared first on The Motley Fool UK.

Additionally, it’s difficult to value Vodafone using traditional metrics like the P/E ratio. At present, City analysts expect Vodafone to report earnings per share of 5.4p for the company’s 2016 financial year. These forecasts mean that the company is trading at an eye-watering forward P/E of 46.

Complex figures

Maintaining a global telecommunications business requires a hefty amount of investment in capital equipment, which has to be depreciated over time. A depreciation expense has a direct effect on the profit that appears on a company’s income statement.

The larger the depreciation expense in a given year, the lower the company’s reported net income. As a result, Vodafone’s net income figure is weighed down by a hefty depreciation expense and is, to a certain extent, misleading. 

For example, last year Vodafone reported earnings before interest, taxes, depreciation and amortisation of £11.7bn. But, after deducting depreciation and amortization the company reported earnings before interest and taxes of £2.1bn.

However, depreciation is a non-cash expense and as a result, the cost doesn’t change the company’s cash flow. So, the best way to try and place an accurate value on Vodafone’s shares is to value the business based on cash flows. The company generated £9bn in cash from operations last year. 

You could also use a sum-of-the-parts (SOTP) valuation, which is also known as a break-up analysis. 

A SOTP analysis provides a range of values for a company’s shares by adding together the value of its individual business segments. 

Crunching numbers

By using a SOTP valuation coupled with cash flow models, Goldman Sachs believes that Vodafone’s shares are worth 220p each. This price target is based on the assumption that Vodafone’s shares trade at the same multiples as the company’s peers.

Moreover, Goldman’s analysts believe that any deal between Vodafone and Liberty Global could unlock up to 30p per share, depending on how the deal is structured. It’s assumed that an agreement between these two telecoms giants will unlock value from assets and help to cut costs.

Another set of analysts, this time at UBS believe that an agreement between Vodafone and Liberty could unlock between 32p and 96p per Vodafone share in value. So, estimates from these two groups of analysts imply that if a deal between Vodafone and Liberty goes ahead, Vodafone’s shares could jump by 30p. 

A final value

Overall, on a SOTP basis, Vodafone’s shares are worth 220p. Nevertheless, if the company agrees a deal with Liberty to sell-off some unwanted European assets an additional 30p per share of value could be unlocked.

What’s more, if Vodafone does decide to sell off its European business to Liberty, the company is likely to return any cash received from the deal to shareholders — there could be yet another special dividend windfall on the cards for investors.

The post Is Vodafone Group plc Really Worth 250p? appeared first on The Motley Fool UK.

One stock that appears to offer a good mix of both income and growth is fund management company, Henderson (LSE: HGG). Its fortunes are clearly closely correlated to the performance of the wider index, since investors tend to be more willing to invest during settled periods and also when the wider macro outlook is positive. And, while the Greek debt crisis is only just drawing to a conclusion, Henderson is already guiding the market towards impressive growth numbers during the next couple of years.

For example, Henderson is expected to increase its earnings by 6% in the current year, followed by a further rise in its net profit of 16% next year. That’s an impressive rate of growth and puts Henderson on a price to earnings growth (PEG) ratio of just 0.9, which indicates that capital gains are very much on the horizon.

Furthermore, Henderson is expected to yield as much as 4.3% next year which, while impressive, is still some way behind Vodafone’s (LSE: VOD) (NASDAQ: VOD.US) yield of 4.9%. Certainly Vodafone’s financial performance has been poor in recent years, with its focus on the slow-growing Eurozone being a major drag on its profitability. However, Vodafone’s move into a more diversified product offering bodes well for its future growth, as well as its relative stability.

In fact, Vodafone’s move into pay-tv and broadband in the UK, as well as across parts of Europe, should provide the company with a renewed growth platform. This could easily spark investor sentiment and change the view among many investors of Vodafone being a slow-growing, utility-like stock. As such, Vodafone’s share price could continue to gain in popularity and move higher as it has done in the last year, where it has risen by 25%.

Meanwhile, the insurance sector continues to offer huge potential for long term investors. A notable stock within the space is Jardine Lloyd Thompson (LSE: JLT). It has delivered a hugely impressive financial performance over the last five years, with its bottom line increasing in each of these years and averaging growth of 10.6% per annum during the period. And, looking ahead, more growth is on the horizon, with JLT’s bottom line set to be around 14% higher in 2016 than it was in 2014.

Furthermore, JLT is expected to yield 3.1% next year despite paying out just 51% of its profit as a dividend. As such, it could become an excellent dividend stock, with a combination of a rising payout ratio and a growing bottom line making its shareholder payout potential very impressive.

The post Boost Your Returns With Vodafone Group plc, Henderson Group Plc And Jardine Lloyd Thompson Group plc appeared first on The Motley Fool UK.

But there’s plenty going on behind the scenes at these two companies, although it may not seem like it at first glance…

Fighting for market share 

BT is currently trying to convince regulators that it should be allowed to acquire mobile network provider EE.

This, it seems, is a full-time job. 

BT’s peers, TalkTalk, Vodafone and Sky, have all attacked the deal, complaining to regulators that it will stifle competition and lead to higher prices for customers. Additionally, the Competition and Markets Authority has already flagged the prospect of a “substantial lessening of competition” in the telecoms markets following the deal. 

BT has issued a rebuttal, claiming that the merger will create a ‘digital champion’ for the UK.

Still, regulators are not convinced, and they’re also concerned about other parts of BT. For example, BT’s dominance of the UK’s broadband infrastructure and fixed-line telecoms market has drawn the criticism of Sky, which has asked regulators to open an investigation into BT.

BT provides broadband access to around 80% of UK homes, so there is a strong argument here. Moreover, smaller peers in the broadband market are trying to beat BT at its own game, targeting places where BT has yet to build a fibre network or has poor connections. Some analysts have stated that this could lead to a damaging price war. 

All in all, it seems as if BT is in damage-control mode. The company is struggling to receive approval for its acquisition of EE while regulators are starting to question BT’s dominance over certain markets. It could take up to two years for BT’s acquisition of EE to go ahead. 

There are plenty of speed bumps ahead for BT. If regulators were to turn against the company, there’s no telling what effect this would have on group earnings. 

Discussing a deal 

Last month Vodafone revealed that it was in talks with US-based Liberty Global over potential asset swaps. Takeover speculation was rife following this announcement, and the lack of information issued by the two companies since is only fuelling the rumour mill. 

The only significant news to be released by Vodafone since, has been the announcement that the company is changing how it measures organic growth. In future, Vodafone’s sales figures will exclude revenue from other operators using its cables to route international voice calls. Unfortunately, this restatement means that, contrary to previous statements, Vodafone’s sales are now falling in its key UK market. 

Deal imminent?

Does this change in accounting standards have anything to do with Liberty’s interest in the company?

It could do. As the two companies have kept quiet on the matter since talks were announced, it is likely that a vigorous due diligence process is taking place. This is good news for shareholders. A robust due diligence process will reduce the risk of overpaying and finding skeletons in the closet at a later date. 

Analysts believe that there could be tens of billions of dollars in synergies at stake if Vodafone and Liberty do agree on a merger or asset swap. So, the deal will take some time to put together. 

And while investors wait for news regarding the Vodafone/Liberty deal, they’re set to receive a dividend yield of 4.9% from Vodafone’s shares — a return you’d be hard pressed to find elsewhere. 

The post What’s Really Going On Behind The Scenes At Vodafone Group plc And BT Group plc? appeared first on The Motley Fool UK.

Vodafone Group

With a much-awaited deal to solve Greece’s financial meltdown seemingly edging closer, shares in Vodafone (LSE: VOD) have understandably received a boost and the mobile operator was recently dealing 2.3% higher on the day. The firm’s reliance upon a strong eurozone is critical — Vodafone sources two-thirds of total EBITDA from Europe, so Athens’ newfound appetite to avert a continental crisis is great news.

The telecoms play has seen conditions improve steadily in Europe as consumer spending has picked up, while moves into the red-hot ‘quad play’ entertainment space have also turbocharged Vodafone’s sales outlook. When you factor in galloping data demand in developing markets — organic service revenues from the Africa, the Middle East and Asia Pacific region leapt 5.8% last year — in my opinion the London business emerges as a great growth pick.

Indeed, the City expects a 1% earnings uptick for the 12 months concluding March 2016 to advance to 15% in the following year. While it is true these figures produce hefty P/E multiples of 44.1 times and 36.8 times respectively, I believe Vodafone’s generous dividend policy more than offsets these expensive values — a prospective payment of 11.7p through to the end of 2017 results in a huge 5.1% yield.

ReNeuron Group

Shares in biotech play ReNeuron (LSE: RENE) have gone gangbusters in end-of-week trading following news of a huge cash injection, and the firm was recently changing hands 18% higher. The stem cell researchers announced that they had raised £68.4m in a bid to fast-track its product to market, with superstar investor Neil Woodford giving ReNeuron the seal of approval by hiking his stake from just over a quarter to 36%.

The Guildford firm announced that the capital will be used to fund “core cell-based therapeutic programmes and new exosome nanomedicine programme in oncology” through to the first half of 2019, giving plenty of wiggle room in what is obviously a capex-heavy industry. And ReNeuron added that the funds — which it describes as the largest such investment in cell therapy so far this year — should push its stroke and retinitis pigmentosa programmes through to the market authorisation application stage.

Naturally the business of healthcare is a lumpy and expensive one, and as a result ReNeuron also announced today it had made a £10.3m pre-tax loss in the year to March 2015. But with several of its clinical trials making excellent headway, and the company now having the financial clout to really get its R&D operations trucking, I believe ReNeuron could explode higher in the coming years.

Zotefoams

Cellular material producer Zotefoams (LSE: ZTF) also released its latest trading update in Friday business, although prices have so far failed to react and the stock was recently flat on the day. The Croydon company — which manufactures cross-linked block foams across a variety of applications, from packaging and toys through to clothing — announced that revenues are expected to have risen 8% in January-June.

In particular, sales at its MuCell Extrusion technology licensing arm are anticipated to have leapt 40% higher during the period, while revenues at its High-Performance Products division is predicted to have advanced 20%. With raw material prices also declining, the City expects improving demand to propel earnings 14% higher this year, and by another 19% in 2016.

These numbers create high P/E ratios of 27.7 times and 23.2 times for 2015 and 2016, however, while projected dividends of 5.7p and 6p for these years do not create eye-popping value, either — yields ring in at just 1.7% and 1.8% for these years. But beyond the medium term, Zotefoams’ market-leading expertise in niche products could make it a potentially barnstorming pick should demand remain resilient, helped by a planned expansions in Kentucky to boost manufacturing capacity.

The post Should You Invest In Vodafone Group plc, ReNeuron Group Plc Or Zotefoams plc? appeared first on The Motley Fool UK.

High-yielding stocks, then, are one of the simplest remedies to the problem of low interest rates. And, in this space, there is a great deal of choice in the FTSE 350, with yields well above the best that bank accounts can offer being available. For example, mining company Anglo American (LSE: AAL) currently trades on a yield of 6.3%, which is among the highest on offer in the index. Meanwhile, Anglo American’s sector peer, Glencore (LSE: GLEN) (NASDAQOTH: GLNCY.US), also has a top notch yield of 4.8%, thereby making the two stocks of great interest to yield-hungry investors.

Certainly, share price falls are a key reason why both stocks offer such impressive yields, with Anglo American’s share price having declined by 27% since the turn of the year and Glencore’s having slumped by 18% year-to-date. And, with the mining sector enduring a tough period, many investors may be put off buying a slice of both stocks. However, just because their shares have fallen and their bottom lines have come under pressure does not mean that they are not great income stocks.

In fact, dividends at both companies are highly sustainable. For example, Anglo American’s bottom line is set to rise by 29% next year and this means that its dividends should be covered 1.6 times by profit next year. Similarly, Glencore’s bottom line growth of 54% that is pencilled in for next year should allow it to pay dividends 1.8 times out of net profit. Therefore, while not without risk, the outlook is positive for both companies as income plays.

Similarly, Vodafone (LSE: VOD) (NASDAQ: VOD.US) remains a key income stock for a number of investors. And, with its shares having fallen by 5% in the last month in response to a poor outlook for the Eurozone (to which Vodafone has major exposure), its shares now yield a very appealing 5.1%.

Looking ahead, Vodafone seems to be in something of a ‘win-win’ situation. If the Eurozone improves and begins to prosper, then Vodafone’s exposure to it is likely to be seen by investors as a major positive and its shares could move higher. Similarly, if the Eurozone continues to endure a challenging period, then Vodafone’s strategy of buying undervalued assets in the region should be somewhat easier and improve the company’s long term earnings outlook.

As such, and while neither Anglo American, Glencore nor Vodafone are without risk, they appear to be well-worth buying as income stocks at the present time.

The post 3 Of The Best-Yielding Stocks That Money Can Buy: Vodafone Group plc, Glencore PLC And Anglo American plc appeared first on The Motley Fool UK.

MJ Gleeson

Despite releasing a perky trading update, MJ Gleeson (LSE: GLE) has failed to ignite the market in end-of-week business and was last dealing 2.8% lower. However, I believe that this represents nothing more than profit-booking after the housebuilder’s terrific share price ascent in recent months — MJ Gleeson has gained 27% since the start of March alone.

The company’s Gleeson Homes division confirmed the uptrend washing across the industry, with home sales during the 12 months concluding June clocking in at 751, up an astonishing 34% from fiscal 2014 levels. And with MJ Gleeson’s land bank of owned and conditionally-purchased plots up 63% from last year, I believe the firm should continue to enjoy terrific sales growth well into the future.

This view is shared by the City, and MJ Gleeson is anticipated to follow an anticipated 60% earnings advance in 2015 with a 24% rise in 2016, resulting in very decent P/E ratios of 16.3 times and 13.1 times for these years. Furthermore, this brilliant earnings outlook is anticipated to underpin further growth in the dividend — last year’s 6p per share payment is expected to rise to 8.5p in 2015 and again to 10.1p in the current period, yielding a handy 1.8% and 2.3% respectively.

British Polythene Industries

Similarly, wider macroeconomic fears over the unfolding Greek financial crisis has overshadowed a positive release from British Polythene Industries (LSE: BPI), and shares have failed to react at all with the stock last flat from Thursday’s close. The Greenock business announced that volumes during January-May were ahead of those reported during the corresponding 2015 period, even though high polymer prices hampered margin performance.

Still, British Polythene Industries advised that raw material prices look set to start descending, while its North American markets are also ratcheting through the gears. It is true that the impact of strong sterling against the euro is impacting profitability from its European marketplaces, but I believe the plastics play provides irresistible value at current levels — expectations of a slight earnings drop in 2015 results in a P/E ratio of just 9.5 times, while a predicted 5% uptick in 2016 drives this to 9 times.

And British Polythene Industries’ progressive dividend policy sweetens the investment case, in my opinion. A forecast reward of 16.7p per share for this year compares with 16p in 2014, and yields a respectable 2.5%. And the yield creeps to 2.6% for 2016 due to predictions of a 17.5p payout.

Vodafone Group

It comes as no surprise that telecoms leviathan Vodafone (LSE: VOD) (NASDAQ: VOD.US) is one of the FTSE 100’s biggest casualties in Friday’s session, with the enduring eurozone crisis casting fresh doubts over its revenues credentials on the continent. Indeed, last year’s takeover of Greek broadband provider Ono has done the business no favours at the current time, and the company was last dealing 1.8% lower from yesterday’s close.

And for many, Vodafone’s elevated price may be considered a risk too far given its massive reliance upon Europe. Indeed, P/E multiples of 45.3 times and 37.8 times for the years concluding March 2016 and 2017 correspondingly sail well above the benchmark of 15 times that represents decent value. But for more optimistic investors, signs of resilient recovery on the continent, combined with tearaway demand in Asia, makes Vodafone an irresistible long-term growth pick — the City expects a 1% bottom line improvement this year to accelerate to 15% in 2017.

On top of this, Vodafone’s ability to chuck up plenty of cash also makes it one of the best dividend picks money can buy. Last year’s dividend of 11.22p per share is predicted to remain stable around 11.7p per share through to the close of next year, producing a mammoth yield of 4.9%.

The post Should You Buy These Friday Shakers: MJ Gleeson Plc Ord 2P, British Polythene Industries plc And Vodafone Group plc? appeared first on The Motley Fool UK.

The financial levers are there to prevent a Greek drama turning into a European tragedy, and Central Bank president Mario Draghi has pledged to do “whatever it takes”.

Of course, markets are wobbling, as they always do, when uncertainty is in the air. Are Grexit fears providing a good opportunity to buy depressed shares of UK-listed companies with a high exposure to Europe? In particular, are Vodafone (LSE: VOD) (NASDAQ: VOD.US), Banco Santander (LSE: BNC) (NYSE: SAN.US) and Northgate (LSE: NTG) attractive buys?

Northgate

FTSE 250 firm Northgate is the UK and Spain’s leading specialist in light commercial vehicle hire. The Spanish business contributes 30% to the group’s revenue. As it happens, Northgate released its annual results today for its financial year ended 30 April.

The company reported a 45% increase in underlying earnings, and hiked its dividend by the same amount. Management said the weakening euro adversely impacted pre-tax profit by £2.6m, but provided a favourable £28.8m impact on net debt.

Northgate is a well-run business with decent margins, and the price-to-earnings (P/E) ratio of 11.4 looks attractive compared with 18.5 for the FTSE 250 index. Similarly, a dividend covered 3.5 times by earnings and a yield of 2.5%, compares favourably with the mid-cap market’s 2.4% yield and 2.25 times cover.

Banco Santander

In 2014, Banco Santander reported an increase in profits in all 10 of the group’s key markets for the first time since the financial crisis. Europe contributed 52% to profits (UK 19% and Spain 14%), Latin America 38% and the US 10%.

Earnings were up 24% on the previous year, and analysts are forecasting 12% annual growth for the next two years. In addition to its solid earnings prospects, Santander is financially strong, having added €7.5bn to its capital from an equity fundraising in January and rebased this year’s dividend to one third of the 2014 payout.

On a current-year forecast P/E of 11.2, with a still-decent 3.2% dividend yield, Santander looks an attractive proposition.

Vodafone

Vodafone has always had significant exposure to Europe, and the FTSE 100 telecoms giant has been intent on increasing it, following the sale of its stake in US phones firm Verizon Wireless last year.

Vodafone’s most recent results show that just over half of the group’s revenue was generated in Europe (excluding the UK). Acquisitions in Germany and Spain, substantial organic investment in Europe, and early-stage discussions with TV and telecoms group Liberty Global about asset swaps on the continent all highlight the importance of Europe to Vodafone.

The trouble I have with the company is it’s current valuation; namely, a P/E of 41.5 based on forecast earnings for the year to March 2016. A prospective 5% dividend yield has more appeal, but the payout is uncovered by earnings, and I’m not convinced the dividend is sufficient compensation for the nosebleed P/E.

The post Should You Ignore Trouble In Europe And Buy Vodafone Group plc, Banco Santander SA & Northgate plc? appeared first on The Motley Fool UK.

The market continues to speculate whether or not Vodafone (LSE: VOD) and Liberty Global will announce a tie-up any time soon. 

But there are many reasons why a deal is unlikely to go ahead. Firstly, the two companies have different operating structures.

Convincing shareholders

The main reason Liberty won’t make an offer for Vodafone is the different operating structure of the two companies.

As I’ve covered before, Vodafone and Liberty both run their business in different ways. Liberty has a high level of debt and doesn’t pay out a dividend. While Vodafone is one of the FTSE 100’s dividend champions and operates with a relatively low level of gearing.

And as Vodafone is a dividend champion, the company’s shares are held by many UK income funds. These funds would block any deal between Liberty and Vodafone as it will put Vodafone’s dividend payout in jeopardy.

Liberty is unlikely to want a long, drawn-out battle with shareholders for control of Vodafone.

So, it’s more than likely that the company will try and buy the assets it wants off Vodafone, rather than mounting a full takeover.

Cost

The sheer size of the deal is also likely to be a hurdle for both Vodafone and Liberty. 

Vodafone’s equity is valued at $93bn, compared with $45bn for Liberty Global. Including debt, Liberty Global has an enterprise value of about $88bn and Vodafone an enterprise value of around $130bn. 

Vodafone’s net debt-to-EBITDA ratio currently stands at 2.4x, compared to Liberty’s ratio of 5x. 

To acquire Vodafone, Liberty would have to pay in excess of $130bn, while some of this could be funded through equity issuance and asset disposals, for the most part, a deal will have to be financed with debt.

Liberty already touts $44bn of debt on its balance sheet and pays $2.5bn per annum in interest costs, which is around 100% of earnings before interest and tax (EBIT). 

Liberty really would struggle to find the cash to buy Vodafone. 

Management infighting 

Along with shareholder issues and debt troubles, the question of who will run the enlarged Liberty-Vodafone when the deal completes could also be a stumbling block. 

You see, Liberty is controlled by billionaire founder and CEO John Malone. It’s unlikely that Mr. Malone would want to give up control in favour of a new board for the enlarged company.

Regulators 

And the final factor that could hold back a deal between Vodafone and Liberty is the regulatory issues these two companies will face.

Vodafone and Liberty both operate within similar markets across Europe, and in some markets, like Germany, the two companies dominate the market.

Liberty owns Unitymedia, Germany’s second-biggest cable operator and Vodafone owns Kabel Deutschland, Unitymedia’s larger peer. The two companies operations also overlap in Britain, Ireland, the Netherlands Czech Republic, Hungary, and Romania.

So, if any deal were to go ahead, there would need to be a huge restructuring to push it past regulators.

The post Why I Can’t See Liberty Global Making An Offer For Vodafone Group plc appeared first on The Motley Fool UK.