Vodafone Third-Quarter Sales Rise on Pound’s Drop

By Simon Thiel

Feb. 3 (Bloomberg) -- Vodafone Group Plc, the world’s largest mobile-phone company, said third-quarter sales rose 14 percent as the pound slid and revenue climbed in India.

Vodafone had the biggest gain in more than eight weeks in London trading after raising its sales and profit forecast to reflect the currency’s decline. Sales in the three months ended Dec. 31 rose to 10.47 billion pounds ($14.9 billion) from 9.16 billion pounds a year earlier, the Newbury, England-based company said in a statement today. Analysts predicted 10.29 billion pounds, the average of six estimates compiled by Bloomberg News.

The pound slumped 23 percent against the euro in 2008, increasing the value of Vodafone’s euro-denominated sales when converted into the U.K. currency. Excluding currency swings and acquisitions, revenue fell 1 percent as growth in Asia and Africa failed to make up for a decline in Europe, where the company generates about two-thirds of its sales.

“Our underlying performance showed similar trends to the previous quarter,” Chief Executive Officer Vittorio Colao said in the statement. “In the context of the current economic environment, we have continued to implement our strategy, with an emphasis on customer value, mobile data, enterprise and fixed broadband.”

Vodafone also made progress on its plan to reduce costs by 1 billion pounds by March 2011, Colao said. The measures will have “some impact on headcount,” he told reporters on a conference call today. He declined to say how many jobs may be affected.

Shares Gain

Vodafone gained as much as 5.7 percent to 135.45 pence, the biggest intraday gain since Dec. 8, and traded at 135 pence as of 8:45 a.m. in London.

In November, the company cut its full-year sales forecast for the second time in four months. Today, the company raised its forecast for sales and profit to reflect the pound’s decline.

Vodafone now predicts a full-year adjusted operating profit of 11.5 billion pounds to 12 billion pounds on sales of 40.6 billion pounds to 41.5 billion pounds. That compares with a previous forecast for adjusted operating profit of 11 billion pounds to 11.5 billion pounds on sales of 38.8 billion pounds to 39.7 billion pounds.

In Europe, Vodafone’s sales excluding currency swings and acquisitions dropped 2.8 percent. That compares with a 3.5 percent increase for Africa and Eastern Europe and with a 9.2 percent gain in Asia and the Middle East.

‘Deteriorating’ Market

Service revenue in Spain dropped 5.8 percent amid a “deteriorating market environment” that put pressure on usage in some customer segments.

Vodafone has expanded in emerging markets in the past two years with acquisitions in Turkey, India and Ghana to make up for slower growth in Europe. Vodafone added 9.5 million new customers in the fiscal third quarter for a total of 289 million on Dec. 31.

The company bought a 52 percent stake in Hutchison Essar Ltd., now India’s third-largest wireless provider, for $10.7 billion in May 2007, and purchased Turkey’s Telsim Mobil Telekomunikasyon Hizmetleri AS for $4.55 billion in 2006. On May 28, Vodafone and a local partner said they will pay $2.1 billion for Qatar’s second wireless license.

To contact the reporters on this story: Simon Thiel in London at sthiel1@bloomberg.net.