Vodafone’s shares surge amid growth predictions

SHARES in Vodafone have surged after the telecoms giant swung to profit and upped its growth outlook thanks to solid growth in Spain and Italy.

The firm was up more than 5% in afternoon trading on the London Stock Exchange after hiking its annual growth targets for earnings from between 4-8% to around 10%. The FTSE 100 company is expecting full-year earnings of between £13.15-£13.33bn.

In a double dose of cheer, Vodafone recorded a £1.1bn profit for the six months ending in September, up from a £4.5bn loss over the period last year.

The boost came after the group booked a hefty charge on its India operation during the six-month period in 2016.

Vodafone said half-year pre-tax profits had climbed 55% to £1.9bn, with mobile data traffic soaring 88% thanks to strong demand in India and Europe.

While UK service revenues dropped by 9.6%, Italy and Spain churned out bright performances, rising 2.1% and 2.3% respectively.

Group chief executive Vittorio Colao said: “Revenue grew organically in the majority of our markets, driven by mobile data and our continued success as Europe’s fastest-growing broadband provider.

“Enterprise revenues continue to grow, led by our internet of things (IoT), cloud and fixed services, and for the second year running we achieved an absolute reduction in our operating costs.

“As a result, we are able to report a strong financial performance, with substantial EBITDA (earnings before interest, taxes, depreciation and amortisation) margin expansion and profit growth, and we are raising our financial outlook for the year.”

Despite the profits swing, group revenue slipped 4.1% to £20.58bn following the consolidation of its Vodafone Netherlands arm and the creation of joint venture VodafoneZiggo.

The India unit proved a drag on the business, sinking more than 15.8% following rival mobile operator Reliance Jio’s aggressive push into the market.

Mr Colao said the competition in India “remained intense” and Vodafone’s customer base had fallen, but it had still managed to hold on to mid and high-value customers. The update comes after Vodafone India and Idea Celluar announced the sale of their India telecoms tower business for £915m to American Tower on Monday.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Vodafone has posted a strong set of results, despite headwinds from a strong euro, and in a sign of growing confidence, the group has upgraded its profit forecasts for the full year, which has bumped the share price up considerably.”