Vodafone lifts outlook on emerging markets

Tue Nov 8, 2011 5:11am EST
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By Kate Holton

LONDON (Reuters) - Vodafone (VOD.L: Quote) lifted its full-year profit outlook on Tuesday as strong growth in emerging markets and robust trading in northern Europe more than offset weakness on the southern fringes of the euro zone.

The results were boosted by growth in India and Turkey and solid performances in Germany, Britain and the Netherlands. Vodafone raised its interim dividend by 7 percent on top of a special dividend from U.S. venture Verizon Wireless (VZ.N: Quote).

"They're really great numbers," analyst Will Draper at Espirito Santo said. "The revenue is strong in a quarter that we expected to be the weakest in the year.

"The fading impact of (regulatory cuts) from now onwards, in Germany especially, give us optimism that service revenue growth and EBITDA margin will improve further in the second half."

Shares in Vodafone were up 2.4 percent to 176.95 pence in early trading and were the top gainers in a European telecoms index up 1.7 percent.

The group moved its outlook for full-year adjusted operating profit to the top end of its range, predicting profits of between 11.4 billion and 11.8 billion pounds, compared with an earlier forecast of 11 to 11.8 billion pounds.

Part of the growth was driven by a strong performance in India, where service revenue accelerated to 20.1 percent in the second quarter from 16.8 percent in the first, due to a larger customer base making more calls and accessing the Internet.

The group was also boosted by strong demand around the world for data services, enabling customers to access the internet on the go via smartphones, and by signing up more corporate customers.   Continued...

<p>A worker replaces fluorescent lights on a Vodafone billboard in New Delhi June 20, 2011. REUTERS/Parivartan Sharma</p>