Vodafone returns to quarterly sales growth

The world’s second largest mobile operator said the rise in fourth-quarter organic service revenue of 0.1 per cent, which followed 10 quarters of declines, meant that its overall earnings could also stabilise in 2016.

The group, which has been hit hard by the constraints on consumer spending in its big European markets and by regulator-imposed price cuts, forecast a range for 2015-16 core earnings of £11.5bn to £12bn.

Compared to the £11.9bn it reported for the 2014-15 period, that could indicate a return to growth following seven straight years of earnings decline on an organic basis.

Analysts say Vodafone has a tendency to set a cautious outlook.

“We have seen increasing signs of stabilisation in many of our European markets, supported by improvements in our commercial execution and very strong demand for data,” Chief Executive Vittorio Colao said.

Vodafone, with 446,000 mobile customers in countries ranging from Albania to Spain, Qatar, India, South Africa and New Zealand, has struggled in recent years as consumers in Europe cut back on using their phones at a time when it needed to invest in new networks.

With growth also slowing in its emerging markets, Vodafone embarked on a programme to either build or buy superfast fixed-line broadband networks to compete with rivals offering mobile contracts alongside television, broadband or fixed-line deals.

With its European markets starting to stabilise, analysts believe Vodafone is best placed amongst many of its peers to return to earnings growth quickly as it has such a large exposure to the region and will have the ability to gradually increase prices.

The group said it intended to grow its dividends per share annually.