iPad helps to ring up higher profits for Vodafone

The phone company has had another good year - but says 2012 may be rather different.

by Emma Haslett
Last Updated: 29 Jul 2011
It’s a little-known fact (well, we'd forgotten) that ‘Vodafone’ is short for ‘voice, data, phone’. And the company is really living up to its name these days: it’s had something of a bumper year, thanks mainly to an increase in the popularity of data-hungry smartphones. The company saw its pre-tax profits jump by 9% to £9.5bn in the year to March 31, while revenues were up by 3% to £46bn. That’s better than the City expected. But it isn’t cracking out the champagne quite yet; on the back of a weaker showing in Spain and Italy (not to mention the potential loss of a significant chunk from its UK bottom line), it doesn't expect performance to be quite so rosy next year...

Vodafone's full-year data revenues rose to £5.1bn, which is an increase of more than a quarter; in fact, data now accounts for more than 12% of total group revenues. Apparently, that was in part thanks to UK customers switching to packages with caps on data usage (rather than the unlimited packages they had before), and partly thanks to the humble iPad, which Vodafone thinks will become a ‘mass market device’ in the near future.

Abroad, the picture was more mixed: while emerging markets like Africa, the Middle East and Asia Pacific saw a 3.2% rise in revenues, to £45.9bn,  things were looking shakier in Europe. Specifically, revenues in its ‘traditional’ mobile phone market (ie. phone calls – remember them?) are falling: in Spain, they were down by 10.6%, while in Italy, they dropped by 6%.

On top of this, Vodafone will suffer another hit to its top line when termination charges - the amount it charges other networks to connect calls - are abolished in the UK next year. So chances are that the company's results won't look quite as impressive in 2012. It certainly seems to think so: it has decided to lower guidance for its underlying profits to somewhere between £11bn and £11.8bn. Although that's hardly an amount to be sniffed at, we're sure you'll agree.

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