Will Vodafone Group plc Beat BT Group plc, SKY PLC, Talktalk Telecom Group PLC And Pearson plc After Q3 Update?

Are shares in Vodafone Group plc (LON:VOD) (LSE:VOD.L) a better investment prospect than BT Group plc (LON:BT.A) (LSE:BT.A.L), SKY PLC (LON:SKY) (LSE:SKY.L), Talktalk Telecom Group PLC (LON:TALK) (LSE:TALK.L) and Pearson plc (LON:PSON) (LSE:PSON.L)?

Vodafone Group plc
Vodafone Group plc

Vodafone Group plc (LON:VOD) (LSE:VOD.L) has released a Q3 update to the stock market. Investors should be encouraged by group organic service revenue growth of 1.7%, with Europe up 0.7% and AMAP rising 3.9%.

In Europe, growth has continued as ARPU stabilises. Italian growth was 3%, growth in Germany was 1.8%, in Spain it was 0.8%, but In the UK Vodafone registered a fall in sales of 3.2%. In the UK, despite an improvement in customer service, there has been heightened competition within the Enterprise segment. However, this was offset by stronger performance elsewhere in Europe, where the successful adoption of the ‘more-for-more’ propositions was evident.

While investors should be upbeat about AMAP growth in my view, growth in India slowed and acted as a drag on its overall performance. Sales in India fell 1.9% as free services from the new entrant caused greater competition, but this was offset by growth in Vodacom of 4% and in Turkey of 15%. Vodafone expects strong competitive pressure in India in Q4 and it is taking a series of commercial actions such as an extension of 4G services to 17 leading circles.

Vodafone’s shares should benefit today in my view from its reaffirmation of previous guidance for the full year. In the last year its share price has declined 14%, which is still ahead of TMT peers BT Group plc (LON:BT.A) (LSE:BT.A.L), Talktalk Telecom Group PLC (LON:TALK) (LSE:TALK.L) and Pearson plc (LON:PSON) (LSE:PSON.L). BT’s shares are down 37%, Talktalk’s stock has slumped 23% and Pearson’s shares have lost 19% of their value. However, sector peer SKY PLC (LON:SKY) (LSE:SKY.L) is down less than Vodafone, with its share price falling by 7% in the last year.

In my view, Vodafone remains an appealing investment after today’s Q3 update. I believe its shares will benefit from the current strategy and while its performance in the UK and India has been disappointing, I think in the long run the investment it is making in those regions will pay off. Therefore, I think Vodafone’s shares should perform relatively well in future.

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