Bank Of America Sees UK Turnaround As Tough For Vodafone Group plc

In a report published Wednesday, Bank of America analyst David Wright reiterated a Neutral rating and $33.22 price target on

. In the report, Bank of America noted, “BT plans a consumer mobile launch in calendar Q1 2015 and possesses a formidable arsenal of assets to disrupt UK mobile pricing and catalyse a shift to convergent services. This includes 5.4m Wi-Fi hot/home-spots to facilitate data offload (and soon Voice too, per new Apple voice-over-Wi-Fi technology), 2.5Ghz spectrum, and proprietary content and superfast broadband hooks into a convergent offer. VOD looks increasingly compromised without last mile fixed network. And BT's offer could also penetrate VOD's Enterprise customers, although its CWW network ownership should provide some resistance. As a reminder VOD reported organic service revenue growth -3.2% YoY in Q1 results (from -3.6% Q4). We forecast FY March 15 growth -1.8% but then -4.2% in FY 15/16 as VOD is forced to compete with BT, with FY 15/16 EBITDA -13% (margin -2ppts to 19.3%).” Vodafone Group plc closed on Tuesday at $33.14.