Vodafone rings up £9.5bn profit

A surge in demand for smartphones and better-than-expected growth in the UK helped boost Vodafone's annual profits to £9.5 billion today.

The Newbury-based firm also saw a strong performance in emerging markets such as South Africa and India as profits rose 9% in the year to March 31.

However, the mobile phone giant expects a lower outcome next year due to tough trading in Spain and Italy and also the absence of its French associate SFR, which it sold in April. Guidance for profits at an underlying level in 2012 has been trimmed to a range of £11 billion to £11.8 billion.

That is below today's operating profit figure, which rose 3.1% to £11.8 billion, at the top end of the firm's forecasts allowing for the cost of US partner Verizon Wireless's iPhone launch.

That helped boost US revenues and with good performances in Africa, Middle East and Asia Pacific revenues overall rose by 3.2% to £45.9 billion.

Data revenues jumped by over a quarter to £5.1 billion, representing 12% of group service revenues as use of smartphones increased rapidly.

Vodafone expects tablets, such as the iPad, to give the market a further boost and become mass market devices eventually.

UK revenues, in particular, grew strongly on the back of this trend and were also helped by customers switching from "all-you-can-eat" packages to pricing plans that reflect data usage.

But the end of call termination charges, to be phased in gradually from next year, will have a "significant negative impact" on UK revenues growth in 2012.

Data also grew strongly in southern Europe, but was outstripped by falling prices in traditional mobile phone revenues. Revenues in Spain and Italy fell by 10.6% and 6% respectively.

Vodafone took impairment charges of over £6.15 billion last year for its businesses in the so-called PIIGS countries of Spain, Italy, Ireland, Greece and Portugal.

Chief executive Vittorio Colao added that Vodafone was holding market share in all of its markets and gaining ground in some.

The strength of its key emerging markets of India and South Africa offset the weakness in southern Europe, he added, while, as data becomes more important, he expects the firm's superior network will become more important than price.

He added: "Continuing network investment is an important differentiator for Vodafone, improving the customer experience and giving us leadership in smartphone penetration and in customer take up of data plans."