A push from its joint house broker helped lift Vodafone to a six-week high on Wednesday.
UBS argued that Vodafone could switch tack away from acquisitions and start selling assets where it lacks market leadership and fixed-line infrastructure. Withdrawing from Australia, Hungary, the Czech Republic and Romania could raise £4bn, it said.
“Longer term, Vodafone could either be acquired or consider a transformational deal,” said UBS, which named AT&T and SoftBank as logical bidders. A buyer could be able to draw more quickly on Vodafone’s £63bn of tax losses held in its Luxembourg holding company, which might be worth 39.2p per share, the broker calculated.
Operationally, UBS saw Vodafone’s biggest market returning to growth within the next few quarters. While competition has hindered Vodafone in Germany, its network investment is creating a two-tier market where the cheaper operators will not be able to offer fast connections, UBS argued.
Vodafone added 2.4 per cent to 208.5p after UBS raised its target price to 260p and repeated “buy” advice. Since hitting a four-year low last month, the stock has rallied 13 per cent.