Emerging markets' growth helps Vodafone ring up record figures

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Vodafone raised its full-year sales and profits forecasts yesterday after it posted record-beating half-year figures following strong growth in emerging mar-kets.

Shares in the mobile phone giant leapt 7.4 per cent to top the blue-chip climbers' board as Vodafone revealed it was increasing its revenue forecasts by about £1bn to between £34.5bn and £35.1bn. Expectations for adjusted operating profit were increased to within the range of £9.5bn to £9.9bn, ahead of the £9.3bn to £9.8bn previously forecast.

Its chief executive Arun Sarin said the group would continue to face tough competition in the UK and Europe, as pricing was still under pressure amid a saturated mobile phone market. But tough conditions in Europe were offset by the performance of emerging markets, which saw sales growth of 40 per cent to £4.3bn. The steepest growth was in Egypt, where revenues grew by 33 per cent.

Mr Sarin added that there would be further clarity on its South African joint venture, Vodacom, within the next two months after its partner Telkom completes a strategic review. One possibility could be a partial initial public offering of Vodacom. Vodafone wants to up its stake from 50 per cent to give it a majority holding.

After increasing its stake, "the game plan would be that the remainder of the shares would be listed on the stock exchange", Mr Sarin said. "There will be more than the minimum amount listed on the stock exchange."

Vodafone recently lost to the rival O2 in the battle to secure an exclusive contract for Apple's iPhone, which went on sale to great fanfare last Friday. O2 said it has sold "tens of thousands" of iPhones and added that two-thirds of those buying the much-anticipated handset were new customers to the group and had switched from other operators.

However, Vodafone said yesterday that the hype around the phone was good for the industry and had brought more consumers into its stores. Sales were 10 per cent up in Vodafone's UK stores after the iPhone went on sale as it has reignited interest in phones in general, the company said.

In the UK, underlying profits fell 24 per cent in the half-year period as the company increased spending on promotions to attract new customers and retain existing ones. The customer base in the UK stood at 17.96 million at the end of September after a 10.3 per cent increase due to a rise in con-tract customers.

Mr Sarin said he expects mobile data usage to continue to grow as demand for third-generation services rises. "The innovation happening on the back of wireless broadband data is enormous," Mr Sarin said. "Mobile data is a permanent phenomenon now."

Vodafone has almost doubled the number of global users on faster 3G, or third-generation, devices, to 21 million.

Shares in Vodafone stormed ahead yesterday, with a jump of 13.5p to 195.5p on the revised forecasts as the company rep-orted pre-tax profits of £4.56bn in the six months to September compared with a £3.33bn loss in the same period last year.