The company saw profits increase to £650.2m in the year to March 31 against £539.1m in the previous year.

Vodafone's strong figures came in ahead of analysts forecasts of pre-tax profits of £620-£640m.

Record customer numbers

Vodafone said it had added 1.828m customers during the year, taking its word-wide customer base to more than 5.8m people.

"Demand for mobile telephony is expected to continue to increase and the group's strong financial base will enable further progress to be made in 1997/98," chairman Ernest Harrison said in the results statement.

Chris Gent, Vodafone's chief executive, said he expected half the UK population to adopt a mobile phone by the year 2005. Currently less than one in six people own a mobile.

Rapid overseas growth

The bulk of Vodafone's profit growth has come from overseas as it attempts to develop its international network. Overseas operating profits jumped from £18m to £122m last year.

Vodafone is now looking for further acquisitions abroad, particularly in Asia, Africa and western Europe as mobile phones become more popular around the world.

The company said it would make a solo bid for one of the licences for the next generation of hi-tech mobile phones, called the Universal Mobile Telecommunications Service, which the government will auction next year.

Sir Ernest said: "A stable average revenue per customer was achieved by a 14% increase in minutes' usage over the year offset by planned price reductions in both incoming and outgoing call."

Turnover in the UK increased by 20% to £1.772bn from £1.479bn, he said, primarily as a result of strong growth in customer numbers.

Rise in capital expenditure

Vodafone plans to spend £700m in the current financial year. Half of this will be spent in the UK where the group is continuing to invest in its digital mobile phone network.

Shares in Vodafone had risen 17.5p to 705.5p at 15:15 BST (14:15 GMT).