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Vodafone Group Public Limited Company (VOD - Free Report) recently announced an extension of the existing mobile network sharing agreement with Virgin Media O2 until the mid-2030s. The deal aims to improve network coverage for both their customers throughout the U.K. Per the recently inked agreement, if Vodafone's proposed merger with Three UK receives regulatory approval, the enlarged entity will sell a portion of premium 5G spectrum to Virgin Media O2, which currently holds the lowest share.
Vodafone and Hutchison's Three UK are two of the major network operators in the U.K., alongside EE and O2. Vodafone UK and Three struck a merger deal that will create U.K’s largest mobile network operators with 27 million clients. Vodafone is set to have a majority stake in the combined entity.
The proposed merger is under thorough scrutiny from the Competition and Markets Authority (CMA). Completion of the merger would reduce the number of mobile network operators in Britain to three from four. While this move could mean lower costs and higher profits for the companies involved, consumers might be hit by higher prices and reduced service quality. Additionally, the adverse impact on smaller players in the market is also a matter of concern for the regulators.
Vodafone's new agreement with Virgin Media O2 aims to address these regulatory concerns. Vodafone management emphasized that the proposed merger, together with the new agreement, will create a more balanced spectrum distribution and foster a competitive market structure in the country by establishing a strong third player. Vodafone expects the recent agreement with Virgin Media O2 will alleviate concerns and enable it to gain merger approval from CMA.
The stock has lost 3.1% over the past year compared with the industry’s decline of 10.8%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Vodafone currently carries a Zacks Rank #3 (Hold).
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy) at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 16.07% and delivered an earnings surprise of 15.39%, on average, in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Motorola Solutions Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Currently, Motorola carries a Zacks Rank #2 at present.
It delivered a trailing four-quarter average earnings surprise of 7.54% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 11.51%.
Silicon Motion Technology Corporation (SIMO - Free Report) , sporting a Zacks Rank #1 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.
It is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.
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Vodafone (VOD) Extends Network Partnership Amid Merger Scrutiny
Vodafone Group Public Limited Company (VOD - Free Report) recently announced an extension of the existing mobile network sharing agreement with Virgin Media O2 until the mid-2030s. The deal aims to improve network coverage for both their customers throughout the U.K. Per the recently inked agreement, if Vodafone's proposed merger with Three UK receives regulatory approval, the enlarged entity will sell a portion of premium 5G spectrum to Virgin Media O2, which currently holds the lowest share.
Vodafone and Hutchison's Three UK are two of the major network operators in the U.K., alongside EE and O2. Vodafone UK and Three struck a merger deal that will create U.K’s largest mobile network operators with 27 million clients. Vodafone is set to have a majority stake in the combined entity.
The proposed merger is under thorough scrutiny from the Competition and Markets Authority (CMA). Completion of the merger would reduce the number of mobile network operators in Britain to three from four. While this move could mean lower costs and higher profits for the companies involved, consumers might be hit by higher prices and reduced service quality. Additionally, the adverse impact on smaller players in the market is also a matter of concern for the regulators.
Vodafone's new agreement with Virgin Media O2 aims to address these regulatory concerns. Vodafone management emphasized that the proposed merger, together with the new agreement, will create a more balanced spectrum distribution and foster a competitive market structure in the country by establishing a strong third player. Vodafone expects the recent agreement with Virgin Media O2 will alleviate concerns and enable it to gain merger approval from CMA.
The stock has lost 3.1% over the past year compared with the industry’s decline of 10.8%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Vodafone currently carries a Zacks Rank #3 (Hold).
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy) at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 16.07% and delivered an earnings surprise of 15.39%, on average, in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Motorola Solutions Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Currently, Motorola carries a Zacks Rank #2 at present.
It delivered a trailing four-quarter average earnings surprise of 7.54% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 11.51%.
Silicon Motion Technology Corporation (SIMO - Free Report) , sporting a Zacks Rank #1 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.
It is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.