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Vodafone Share Price Has Sold-Off Lately – Buy, Sell, Hold?

Wiesbaden, Germany - June 03 2018: Vodafone logo on a facade. Vodafone is a British multinational telecommunications company and the world's 2nd-largest mobile telecommunications provider.

Vodafone share price tumbled yesterday after the company ended talks to sell its Egyptian business to Saudi Telecom. The shares ended the day at 121.95, which was the lowest they have been since November 19.

What happened: Vodafone, the giant London-headquartered group, has been in talks with Saudi Telecom about its Egyptian arm. In the deal, Vodafone would have received about $2.4 billion in exchange for its 55% stake in the firm. Saudi Telecom was prepared to pay about $2.39 billion for the deal. 

In a statement yesterday, the firm said that it was abandoning these talks pushing its stock to decline to a monthly low. It did not provide a reason for ending these talks.

Why did Vodafone shares drop: Vodafone share price dropped after the news because it deprived investors of a significant windfall. Also, the company was left at a disadvantage because of its high debt load. The total funds would be worth about 4.5% of the total debt. 

Further, investors believe that the company could actually boost investments in Egypt, leading to pressure on its cash flow. For telecoms, while investments are good in the long-term, they deprive investors of their immediate dividends. 

Indeed, Vodafone’s CEO recently met with the Egyptian president and pledged more investments. Still, the firm will possibly generate additional windfall when it IPOs its mast business.

Meanwhile, in a statement today, the firm said that it would spend about 2.1 billion euros in buying out minority shareholders at Kabel Deutscheland.

Vodafone share price technical forecast

What next for Vodafone shares: On the daily chart, we see that Vodafone share price has been embattled recently. They have fallen by 10% in the past ten days and are along the 38.2% Fibonacci retracement level on the daily chart.

They have also moved below the 25-day and 50-day moving averages. Therefore, the path of least resistance in the near term is lower, with the next target being at the 23.6% retracement at 110p.

VOD shares technical chart

vodafone share price