Dividend boost for Vodafone shareholders

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Vodafone promised a 15 per cent hike in its payout to shareholders today after customer numbers grew to 171 million and underlying earnings rose 58 per cent.

The world's biggest mobile phone company described the half-year figures as strong, although Vodafone sounded a more cautious note about growth next year.

Earnings before one-off items reached £6.7 billion in the six months to September 30, but the impact of a write-down following the sale of operations in Sweden meant the bottom-line figure dipped to £4.1 billion, from £4.54 billion.

Shareholders will get a dividend of 2.2p a share - equivalent to £1.4 billion and up 15 per cent on a year ago - while Vodafone will increase the amount it plans to buy back in shares, by £2 billion to £6.5 billion in this financial year.

Chief executive Arun Sarin said: "I am pleased to announce another strong set of results. We have grown our customer base to 171 million and made good progress on 3G and other global products and services."

The caution from the company came as it said higher levels of mobile phone usage and the greater impact of lower termination rates - calls connected to other networks - were likely to reduce the rate of revenues growth.

Continuing investment in attracting new customers will also leave underlying margins at the lower end of range previously indicated this year.

Overall, group revenues of £18.25 billion for the six months were 9 per cent higher than a year earlier after organic growth of 6.4 per cent and currency movements.

Vodafone described the UK as one of its most competitive markets, with revenues broadly unchanged at £2.57 billion after an 8 per cent gain in customer numbers to 15.76 million.

Average revenues per user fell by 6.4 per cent to £24.90, reflecting the effect of the termination rate cut and a higher proportion of lower spending pre-pay customers.

Non-voice services proved to be the main growth area in the UK after a 12.1 per cent gain in revenues reflected offerings such as Vodafone live! with 3.96 million active devices and 3G with 438,000 devices.