Telecoms giants face the music as investor anger starts to grow

Mobile phone giant Vodafone has been under shareholder pressure in recent weeks as it faced calls for a major restructuring of the business amid concern over its "underperforming" share price.

And the firm is set for another busy couple of weeks to come, with its annual general meeting later this month promising to give Vodafone bosses some headaches.

Investor activist group Efficient Capital Structures (ECS) - owned by a group of Vodafone investors including former Marconi director John Mayo - has forced the firm to include resolutions calling for a capital structure overhaul to be put to a shareholder vote at the July 24 AGM. At the weekend there were signs of growing pressure as the influential investor Glass Lewis publicly supporting proposals for a partial break-up.

First up, however, is Vodafone's trading update on Thursday.

Vodafone has kept the bulk of its investors on side despite unveiling a 0.5 per cent dip in adjusted pre-tax profits to 8.75 billion for the year to 31 March.

But evidence will be expected to back up Vodafone's assurances that the group is making progress in fighting off competition and seeking new revenue streams in Europe.

Germany in particular will be in focus, with a turnaround in the region needed after poor growth last year.

Vodafone pushed through aggressive pricing in Germany during the first three months of the year and analysts say they are hoping for signs of a pick up in revenue as a result.

The company could deflect criticism if it can come up with some strong one-off news, such as announcing it has secured the rights to sell the iPhone in the UK ahead of its rivals. Recently reports emerged that O2 was close to securing the rights to this year's must have technology item though recent speculation is that the battle is still open.

Cable & Wireless (C&W) is set to update investors on trading at its annual general meeting on Friday, but results are likely to be overshadowed by the group's controversial executive pay plans.

The telecoms group is thought to be heading for a shareholder showdown over its proposals to scrap the 20 million cap on individual bonus payouts and introduce a performance-related award for its chairman worth a potential 10m.

C&W has already incurred the wrath of shareholder organisation Pensions Investment Research Consultants, which said it was "alarmed" at the pay plans.

Meanwhile, the Association of British Insurers, whose members control 20 per cent of UK company equity, has issued the group's annual report with an "amber top" - warning that there are contentious issues over pay packages. Despite this the influential Edinburgh insurer, Standard Life, has come out in support of the proposal after commending C&W's turn-around.

C&W argues that its recent recovery has largely been made possible by the introduction of the incentive rewards put in place last April.

The group reported that annual pre-tax profits more than doubled to 249m from 100m in the year to 31 March.

Pubs chain JD Wetherspoon gives its latest update to the City on Wednesday after a warning in May that preparing its pubs for England's smoking ban would leave profits marginally below expectations.

Profit expectations have been trimmed by around 5 per cent, to around 63m for this year because of the costs involved in installing outside facilities. However, the company, which has 39 Scottish sites, is now thought to be winning business away from smaller and less prepared rivals. In Scotland, the group has seen like-for-like sales rise by around 5 per cent in recent months.

In the retail sector, JJB Sports will give its first update to the City tomorrow since founder David Whelan quit the business. Whelan, who set up the business in 1971, netted 190m from the sale of his 29 per cent stake in the Wigan-based firm, which owns the rights to all Rangers merchandise, and stepped down from the board in June.

Analysts will view the trading figures with caution after an earlier update for the 18 weeks to 3 June revealed a 1.8 per cent decline in like-for-like revenues across its retail stores and health clubs. Rival Sports Direct has also struggled since flotation earlier this year, with report's out yesterday that it was likely to miss profits targets.

Seymour Pierce analyst Richard Ratner said he expected the Wigan-based group's like-for-like position to decline by around 4 per cent following continued poor weather last month.

Company watchers will also be looking for updates on the performance of JJB's dedicated Adidas and Nike in-store areas, which are part of its "Serious about sport" plans to boost retail sales. The areas have shown early signs of above-average revenues and profit margins.

Plumbing and heating group Wolseley will post its trading update for the 11 months to 30 June today, with fears of a further decline in the key US market.

The US, which provides around 65 per cent of sales, has weighed down on the company since it said at its interim results it had been hit by a market slowdown compounded by a weak dollar, and there are no signs the situation has improved since.

Analysts at ABN Amro are forecasting full-year pre-tax profits of 685.8, down from 769 last year, but it predicts its problems can be reversed.

LOWDOWN ON FIGURES

PACKAGING and floor covering group Low & Bonar is expected to give a positive update on trading this week and set down the market for further acquisition led growth.

The company, which was based in Dundee up until 2000, is expected by its house brokers to indicate profits will exceed last year's by up to 50 per cent, on the back of strong trading, new contracts and two acquisitions in the last year. The company retains its registered office in Dundee. Low & Bonar's artificial grass operation has been boosted in recent months on demand driven by the upcoming Beijing Olympics. The only factor weighing the company down is the increased price of raw materials, driven by rising world oil prices. Analysts at Numis believe the company could sustain acquisitions worth 130 million from new debt facilities.