Growth in use propels Vodafone to a target-beating performance

A 1bn cost savings programme and signs of improved revenue trends in key markets such as the UK also lifted the Newbury-based firm.

Operating profits of 11.9bn were ahead of the company's previous guidance in February after revenues increased by 8.4 per cent to 44.5bn in the year to March 31 – down 2.3 per cent when excluding currency changes and acquisitions.

Vodafone said it expected a return to organic revenue growth in the current financial year, although this would depend on the economic environment and the level of unemployment within Europe.

Revenue growth in emerging economies, in particular India and Africa, is expected to continue as the group boosts its presence and offers more data services in these markets.

The company said revenues in the UK declined by 4.7 per centin the year, with lower voice revenues and continued "intense" competition partially offset by higher messaging and data revenues.

With Vodafone becoming the third network to muscle into the iPhone market, the decline in UK revenues for the fourth quarter slowed to 2.6 per cent from 3.2 per centi n the previous three months.

Underlying earnings in the UK fell by 16.6 per cent to 1.14bn.

At a group-wide level, pre-tax profits were impacted by a 2.3bn write-down on the value of its India operation.

This reflected intense competition and the award of six new national licences, although the operational performance has been strong since the company's entry in 2007.

The group pre-tax profits figure of 8.7bn still exceeded last year's 4.2bn after bigger write-downs in the previous financial year.

Chief executive Vittorio Colao said: "Vodafone's financial results exceeded our upgraded guidance on all measures. Revenue trends have improved again in the fourth quarter, driven by growth in mobile data and fixed broadband."

Investec Securities analyst Jonathan Groocock said the results were solid, with the usual mix of "some good, some bad".

He added that Vodafone finally looked to be turning the corner after years of price pressure.