Demand for smartphones boosts Vodafone revenues

Vodafone posted its first quarter of revenue growth since the global downturn began, driven by the growing popularity of smartphones and its operations in emerging markets.

Britain’s third-largest mobile phone operator said its revenue rose 1.1 per cent to £10.5bn in the three months to the end of June, beating expectations, and it had seen improvement “across all regions”. The period also marked a return to growth for its UK business,which improved by 0.7 per cent.

The chief executive, Vittorio Colao, said the results were the culmination of a strategy he set out in November 2008 to slash costs and call time on big takeover deals. “We have achieved these results through our continuing commercial approach in key European markets,” Mr Colao said. “Focusing especially on data, and from strong growth in emerging markets."

Income from mobile data rose by 33 per cent during the quarter, as more Vodafone customers took delivery of smartphones such as Apple’s iPhone and other handsets running Google’s Android operating system. Subscribers are increasingly using their mobiles to access the internet. The company said it was drawing up a new strategy to “take advantage of the widespread adoption of data” later this year.

Vodafone also saw strong growth in emerging markets, with India up 13.7 per cent and its once troubled Turkish division posting a record increase in service revenues of 23.7 per cent.

Steve Malcolm, an analyst at Evolution, said that while Vodafone was unlikely to have significantly outperformed its rivals in major markets “data trends and emerging market trends were, on the whole, positive."

Vodafone also settled a tax dispute with the Government, agreeing to a pay £1.2bn to HM Revenue and Customs over five years. Mr Malcolm said this was “positive” because the company had set aside £2.2bn to settle the issue.

However, Mr Colao would not be drawn on the future of the Vodafone chairman Sir John Bond, after a prominent investor called earlier this week for him to be ousted.