Stronger signals from Vodafone

Turnaround hopes at Vodafone's under-pressure European division were lifted yesterday after signs of improved sales trends in the UK and Germany.

While service revenues were down 3.2 per cent in the quarter to

December 31, this represented an improvement on the previous quarter after the combination of new handsets and promotional offers ignited customer inter- est.

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In the UK, revenues were down by 4.9 per cent, against the 5.7 per cent decline reported in November.

Data revenues across the group exceeded 1bn for the first time in the quarter, helped by increased take-up of data-enabled smartphones in Europe. The figures do not include the impact of Apple's iPhone, which Vodafone started selling in the UK in mid-January.

Chief executive Vittorio Colao has been under pressure from

shareholders to show he has the right strategy in place to improve fortunes in Europe, while maintaining the company's growth rate in emerging markets.

Some shareholders are understood to be pressing for a break-up of the company if the European division cannot be revived.

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Shares have lagged Vodafone's rivals in recent months, but the trend reversed yesterday after the stock jumped 5 per cent in the FTSE 100 Index.

Investors were also cheered by improved results guidance, with operating profits now expected to be in the range of 11.4bn and 11.8bn in the year to March, up from 11bn to 11.8bn previously forecast.

This reflected a 1bn cost-cutting programme undertaken by the group in the last year.

Mr Colao, who took the helm in July 2008, said: "We are on track to deliver on our strategic priorities in the current financial year."

Vodafone said revenues increased by 10.3 per cent to 11.5bn in the quarter, helped by service revenues growth of 10.4 per cent in Asia Pacific and the Middle East.