Smartphone growth lifts Vodafone

MOBILE phone operator Vodafone has reported annual profits at the top end of City forecasts, boosted by growing smartphone use, but warned that revenue growth in the year ahead will fall short of previous estimates.

The group reported an adjusted operating profit of £11.5 billion for the year to 31 March, up 2.5 per cent on a year earlier, on revenues 1.2 per cent higher at £46.4bn.

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However, faced with reduced customer spending across southern Europe, it wrote down the value of its businesses in the region by £4bn. With trading in Italy and Spain showing little sign of improvement, it now expects organic service revenue growth in 2013 to be slightly below its previous medium-term target range of 1 to 4 per cent.

Jonathan Jackson, head of equities at Killik & Co, said the sales forecast was “disappointing” but he pointed out that adjusted operating profits are expected to come in at between £11.1bn and £11.9bn next year as continued growth at its Verizon Wireless joint venture in the US offsets the weaker euro.

Vodafone, which has launched a £1bn bid for Cable & Wireless Worldwide, said 27 per cent of European customers were now using smartphones, up from 18.6 per cent a year ago.