Vodafone Tops Forecasts with Robust Revenue

Vodafone Group, the world's largest mobile phone company by revenue, topped market forecasts with solid third-quarter revenues on Thursday and held out the possibility of another full-year upgrade.

British-based Vodafone said revenues rose to 9.2 billion pounds ($18.33 billion), with organic growth of 4.4 percent, just ahead of most expectations and similar to the previous quarter.

The company, which is seeking to accelerate pedestrian growth in its core European markets with greater exposure to faster-growing emerging markets, said its EMAPA businesses in eastern Europe, the Middle East and Africa, Asia Pacific and affiliates saw organic revenues surge 13.7 percent.

In competitive European markets, where voice call usage is just keeping ahead of price falls of around 15-20 percent, surging revenues for mobile data of 41.5 percent helped support growth of two percent.

But the numbers were not impressive enough to lift a somber market mood and Vodafone's shares, which closed 0.9 percent lower.

"The market mood is changing," said one leading telecoms analyst, noting that where once strong results would have sent a stock surging, they now left investors cold. "But the results were commendably dependable."

Charting the Euro

Some analysts had hoped the company, whose customer base now stands at 252.3 million, would upgrade full-year forecasts for the second time this financial year after a seven percent appreciation of the euro against sterling.

However, Vodafone merely reiterated forecasts, noting that the current strength of the euro, which affects around 60 percent of its revenues and profits, might have a "favorable impact," especially on full-year revenues.

"We did think about whether to make a change at this point," Finance Director Andy Halford told a conference call.

"(But) we still have eight to nine weeks to go this year. So we were a bit concerned that if we went changing numbers now, we risked changing numbers again at the end of the year and that we would potentially confuse more than we would help."

Emerging Markets Shine

While German and Italian sales fell by 5.2 percent and 3.1 percent, within expectations, Egyptian revenues grew by almost 31 percent and Vodafone Essar, one of the top mobile groups in India, pushed up revenues by 56 percent and added 4.2 million new customers, taking its subscriber base to 39.9 million.

At Vodacom, the South African-based mobile phone joint venture with former telecoms monopoly Telkom which Vodafone is keen to buy out, service revenue grew 14.7 percent and its customer base nudged up by 0.7 million to 16.5 million.

One top performer was Vodafone's minority investment in Verizon Wireless, which is controlled by U.S. heavyweight Verizon Communications . Despite market fears of a looming U.S. recession, revenues grew by 14.4 percent.

Chief Executive Arun Sarin said he had yet to see any tangible sign of any economic slowdown hitting his businesses.

"We've seen very strong results in the U.S., and the U.S. is supposed to be leading the parade, as it were, on where the economies might head," he told the conference call, adding that he was keeping a close eye on all of his global businesses.

"And obviously, we don't know this for sure, but we think we are resilient but not immune (to an economic slowdown)."

Vodafone, which last upgraded full-year forecasts three months ago, is targeting full-year adjusted operating profit of 9.5 billion-9.9 billion pounds on revenues of between 34.5 billion and 35.1 billion pounds.