Vodafone beats St, lifts targets with eye on India and Turkey

LONDON: Vodafone Group, the world’s biggest provider of mobile-phone services, raised its sales and profit forecasts on accelerating growth in India and Turkey, as well as higher revenue from wireless internet access in Europe. Net income in the six months to September 30 was £3.29 billion, or 6.19 pence a share, compared with a year-earlier loss of £5.1 billion or 8.88 pence, Vodafone said on Tuesday in a statement. Profit beat the median estimate of £3.03 billion in a Bloomberg News survey of analysts.

Vodafone rose as much as 4.2% in London trading. The Newbury, England-based company bought India’s Hutchison Essar in May to gain access to the world’s fastest-growing major wireless market. Chief executive officer Arun Sarin also is cutting costs and getting more web-usage revenue from customers in Europe, where most people already have a mobile phone.

“This totally vindicates Sarin’s strategy,” said Adam Steiner, head of research in London at SVG Capital, which manages e4.5 billion and whose biggest holding is Vodafone. “The good news is data, Turkey and India.”

Sales rose 9% to £17 billion, beating the estimate of £16.9 billion in a survey of 11 analysts. Vodafone had 241 million customers at the end of September.

Vodafone shares rose 6.3 pence, or 3.5%, to 188.3 pence in London, after climbing as high as 189.7 pence. Before Tuesday, they had risen 29% this year, making the company the second-best performer in the 20-member Bloomberg Europe Telecommunication Services Index, behind Telefonica.

Vodafone raised its revenue, adjusted operating profit and cash flow forecasts for fiscal 2008, which ends in March next year. Sales will be £34.5 billion to £35.1 billion, adjusted operating profit will be £9.5 billion to £9.9 billion and free cash flow will be £4.4 billion to £4.9 billion. The company raised its interim dividend by 6% to 2.49 pence a share.

In May, Vodafone said fiscal 2008 sales would be £33.3 billion to £34.2 billion, and forecast adjusted operating profit of £9.3 billion to £9.8 billion.

Earnings before interest, taxes, depreciation and amortisation rose 5.2% to £6.57 billion. Profit on that basis was forecast to climb to £6.41 billion, the median estimate of 13 analysts.

The results and the forecast may deflect future criticism from some investors. At the annual meeting in July, shareholders backed Sarin and rejected a plan by a money manager to spin off Vodafone’s stake in US carrier Verizon Wireless. In 2006, Sarin was opposed by investors holding 9.5% of shares voted.

“The talk about Sarin being under pressure” has ended, said SVG’s Steiner. “A couple more of these results and he can leave a hero.”Vodafone’s sales in Europe rose 2% to £12.7 billion in the period. That compares with the median analyst estimate of £12.6 billion. The gains in data sales are a “real trend” and not just a one-time anomaly, Sarin told reporters on a conference call. “Mobile data is a permanent phenomenon now,” he said. Data revenue for the company rose 49% to £1 billion.

Sarin on Tuesday said Vodafone may sell shares in Vodacom Group in an initial public offering as part of a plan to raise its 50% stake in South Africa’s largest wireless provider.