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Last Updated: Tuesday, 24 May, 2005, 10:27 GMT 11:27 UK
Vodafone in 3G and profits growth
Football fans using their mobile phones
The company is looking to new markets for earnings growth
Vodafone has reported bumper profits before writedowns of 10.3bn ($18.8bn), among the largest for any UK company.

The world's largest mobile phone firm by revenue said it had signed up 2.4 million subscribers to its 3G phone services, topping many forecasts.

Its profits before writedowns - mainly of goodwill on acquisitions, including the value of licences - were up 3% in the year to 31 March.

But after these costs it made a loss of 4.7bn. Sales rose 2% to 34.13bn

During the year to end March, the company saw its customer base rise by 16.3 million, or nearly 12%, to 154.8 million.

Vodafone also said it would buy back 4.5bn worth of its own shares, and double its dividend payment to 4.07p.

"This step change in the dividend payment underlines our confidence in the future prospects for the group," the company said.

Nevertheless Vodafone shares dropped more than 4% in early trading as poor Japanese figures affected investor confidence in its future growth.

Japan factor

Competitive pressures are increasing, with new players entering our markets
Arun Sarin, Vodafone chief executive

The company declined to provide a forecast for its Japanese business for the current business year.

But sales at the business fell 11.2% in the year to 31 March as customers defected to rivals.

Japanese customers, among the most sophisticated mobile users in the world, failed to be impressed with 3G phones designed for Europe.

Vodafone said it needed to provide more attractive content. Flat-rate plans and family discounts from competitors had also helped to lure customers away.

In February, Vodafone decided to transfer Bill Morrow, formerly chief executive of its UK business, to become president of its Japanese business, in a bid to bring about a change in fortunes. He has been in the post since April.

Dialling up

Its global 3G figures were encouraging, however, and Vodafone said it had now signed up 2.4 million subscribers to the service.

Telecoms industry consultant Neil McCartney said they indicated the strength of demand for new services such as faster internet connection and video messaging.

Many analysts had been expecting 3G subscriber number of closer to 1.5 million, he added.

Vodafone launched its 3G service worldwide in November, after it was previously rolled out in Japan, which has proved to be a tough market.

"Many of the mobile markets in which we operate are highly penetrated and competitive pressures are increasing, with new players entering our markets," chief executive Arun Sarin said in a statement.

The company said it is looking to new markets for earnings, and expects to complete acquisitions in Romania and the Czech Republic where there are "attractive growth prospects".

The group expects to deliver "organic growth", which does not include the effect of acquisitions, of between 6% and 9% in the current financial year.

Last year, Vodafone bought-back 4bn of its own shares.




SEE ALSO:
A back-to-basics mobile launched
21 May 05 |  Technology
Vodafone subscriber numbers soar
26 Jan 05 |  Business
Vodafone begins 3G mobile service
10 Nov 04 |  Business
Vodafone cuts bottom-line losses
25 May 04 |  Business


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