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Deutsche Bank is sticking with its ‘buy’ rating on Vodafone (VOD), despite the telecommunications giant’s planned €2 billion investment in a fibre optic broadband network Germany, which will see cashflow dented in the near term.
Analyst Robert Grindle has a target price of 300p on the shares, which edged a penny lower to 215p yesterday.
The telecoms giant announced it would invest €2 billion in Germany over the next four years, connecting rural customers.
Grindle said there would be around a 3% ‘near term free cashflow dent’ which was ‘mixed news for investors hoping for increased dividend cover’.
He added that Vodafone’s plans may push other providers to step up their own fibre broadband plans.
‘Vodafone’s increasing willingness to invest in substantial fibre projects represents a significant risk for other incumbents across Europe,’ he said.