Vodafone tipped for iPhone deal in Europe

Vodafone recovered from early weakness to close higher Monday amid talk that it could land an exclusive deal to sell Apple’s iPhone in Europe.

Shares in the mobile phone operator opened lower as traders digested a Financial Times interview with Denny Strigl, chief operating officer of Verizon Communications.

Mr Strigl refused to say whether Verizon Wireless, the US mobile phone company in which Vodafone has a 45 per cent stake, would resume dividend payments in two years.

However, Vodafone bounced back to finish 1 per cent higher at 157.6p after Credit Suisse issued a “trading buy” recommendation and said the company was the frontrunner to land the European iPhone contract.

In the US, AT&T won an exclusive five-year deal for the iPhone, which goes on sale this week.

Credit Suisse said a similar deal in Europe would provide a fillip to the Vodafone share price.

“The winner could sell more than 6m such devices over the next 3 years. Assuming half these were new customers, this could add 8p to our valuation if Vodafone were to win,” it said. After the market closed, a block of 200m Vodafone shares were traded at 157.6p. Traders reckoned it might have been an activist investor buying stock.

In the wider market, leading shares closed higher for the first time in six trading sessions.

Lifted by a strong opening on Wall Street, the FTSE 100 rose 21 points, or 0.3 per cent, to 6,588.4. The FTSE 250 fell 11.7 points, or 0.1 per cent, to 11,577.4.

However, trading volumes were thin and traders said the mood would remain jittery until the US interest rate decision on Thursday.

J Sainsbury provided the session’s speculative feature, rising 1.8 per cent to 582½p on talk that several members of the Sainsbury family had been approached to see if they would be prepared to sell their holdings at 610p a share.

On a more fundamental tack, Enterprise Inns recovered some of Friday’s losses, rising 1.9 per cent to 686½p on the back of a Citigroup upgrade to “buy”. Setting a 859p target price, the broker said if Enterprise were able to convert into a Real Estate Investment Trust, its shares would be worth 60 per cent more than the present level.

Should Enterprise fail, Citi said the downside would be limited by a £1bn share buy-back programme, which it expects to kick in over the next 18 months.

Elsewhere, drinks group Diageo improved 0.9 per cent to £10.61 after Credit Suisse said it expected a positive trading statement next week.

“We believe the growth has continued apace in the US and international divisions and that European revenues have seen a recovery from a weak first-half,” the broker said.

Anglo American, down 1.4 per cent at £29.95, and Antofagasta, off 1.6 per cent at 608½p, were among the biggest fallers in the FTSE 100 after both mining companies were downgraded by Cazenove.

The broker said it had decided to cut Anglo to “in-line” because it was trading at a 25 per cent premium to rivals Rio Tinto, up 0.1 per cent to £37.90, and BHP Billiton, 1.1 per cent better at £13.90.

As for Antofagasta, Cazenove said the downgrade to “underperform” was based on the fact that the copper miner looked expensive against its peer group.

Forth Ports was among the best performers in the FTSE 250, climbing 4.8 per cent to £18.46.

Shares in the property and ports group, which has been touted as a takeover target for several years, fell 8.1 per cent last week on fears that one of its biggest shareholders was looking to sell because of ethical considerations. Forth is studying proposals to carry out ship-to-ship oil transfers in the Firth of Forth.

HMV Group rallied 3.4 per cent to 123¼p as nervous traders continued to buy back short positions before Thursday’s annual results.

There has been speculation in the past week that HMV, one of the most shorted stocks in London, would announce the sale of its Japanese business alongside the figures. However, speculation late Monday was that HMV had approached Virgin Megastore with a merger proposal. [via]