Vodafone calls up £10bn profits

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The Independent Online

Vodafone reported annual profits of £10 billion today after sales increased by 10 per cent during the year to £33.6 billion.

The underlying figure, which was broadly in line with City forecasts, was achieved after the mobile phone company added 13.7 million new customers worldwide.

Accounting charges of £15.2 billion - in relation to acquisitions made in recent years - meant the group's bottom-line loss for the year to March 31 was £5.05 billion, an improvement on the £6.21 billion seen a year earlier.

The chief executive Arun Sarin, who took over from long-time boss Sir Christopher Gent last year, described the results as a "strong operational performance".

He pledged to return £3 billion of cash to shareholders - on top of a previous £1 billion share buyback programme and the £1.4 billion offered today following a 20 per cent rise in the company's final dividend to 1.0780p per share.

The latest share buyback comes after Vodafone missed out in the £21.5 billion race earlier this year to buy AT&T Wireless of the United States.

As well as strong customer growth, Vodafone said "escalating" take-up of data services had driven the double-digit growth in revenues for the year.

The improvement in data revenues follows growth in demand for Vodafone live!, the company's messaging and multi-media content product.

The service is now available in 16 countries and was enhanced in some countries to include third generation technology earlier this month.

In the UK, where full commercial 3G services have not yet been launched, Vodafone said turnover increased 18 per cent to £4.74 billion with customer numbers up by 6 per cent to 14.1 million. According to the UK regulator Ofcom, the company had a market share of 31.8 per cent in the quarter to the end of September 2003.

Despite the sales growth, UK margins were 4.4 percentage points lower at 33.9 per cent as the company increased investment in the acquisition and retention of its customer base.

As well as the share buybacks, Vodafone said it would spend £2.6 billion on buying the outstanding shares in its Japanese subsidiaries.

The move comes after Vodafone said the financial year in Japan had been challenging because of the strength of rival products.

The company's market share in the country was marginally lower at 18.4 per cent, although turnover increased 4 per cent to £7.74 billion.

Shares fell more than 3 per cent following the results as analysts expressed disappointment that Vodafone had not managed to beat market expectations.

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