Vodafone starts to reap returns from investment in 4G

SHARES in mobile phones giant Vodafone surged ahead yesterday as it upped its full-year outlook after growing first half earnings and sales – while also lambasting telecoms rival BT.

The group hailed the success of its £19bn Project Spring investment plan. Picture: Getty

The group hailed an “important turning point” as it ramped up growth in organic service revenues - a closely-watched measure of sales - in the three months to the end of September, up by 1.2 per cent against a rise of 0.8 per cent in the first quarter.

Vodafone’s underlying earnings rose 1.9 per cent to £5.8 billion at the halfway stage, and said it now expected a full-year haul of £11.7bn to £12bn. It previously guided at around £11.5bn. But on a statutory basis, earnings were 1.7 per cent lower and pre-tax profits fell to £232m in the six months, down from £406m a year earlier.

The group hailed the success of its £19bn Project Spring investment plan, which is resulting in wider 4G coverage in Europe and 3G coverage in emerging markets, for the underlying growth.

Mobile data in the UK almost doubled year-on-year as its customers took full advantage of 4G. Vodafone chief executive Vittorio Colao also delivered a broadside at rival BT, accusing it of trying to “re‑monopolise” the UK telecoms sector by forcing broadband firms to use its old network and delivering speeds that are slower than other countries.

BT rejected the claims yesterday as “highly misleading”, adding the UK was “one of the most competitive telecoms markets in the world”.

Vodadone’s shares jumped more than 4.5 per cent before later closing up 3.9 per cent at 222.8p.

The robust half-year results and profits upgrade came as a welcome dose of good news for investors after Vodafone recently dashed hopes of a £100bn mega-merger with cable firm Liberty Global.

The firm ended talks with Liberty in late September, having sparked speculation over a merger when it said in June it had entered discussions regarding ‘’a possible exchange of selected assets between the two companies’’.

While Vodafone had always dismissed talk of a full-blown merger, the City was left disappointed that talks had come to nothing and shares slumped to their lowest level for nearly a year.

Colao said yesterday: “We have reached an important turning point for the group.” He added: “Our customers are benefiting from the significant investments we are making in high speed mobile and fixed networks, as evidenced by the huge growth in demand for data and the increased loyalty to Vodafone services.”

Its interim underlying earnings growth marked a sharp reversal of the 10 per cent drop seen a year earlier.