Vodafone returns to growth

THE outlook became brighter for the mobile phone sector yesterday as operator Vodafone returned to growth for the first time since the economic downturn and manufacturer Ericsson posted a doubling of profits in its second quarter.

Vodafone said there was still room for further economic improvements in many of its markets but said the changes it had made so far - to focus on the sales of data plans for internet access and emerging markets - had worked well.

Turnover rose by 1.1 per cent to 10.6 billion in the second quarter, following further robust growth in emerging markets and strong sales of smartphones in the UK, including Apple's latest iPhone model.

Revenue from data usage in the UK rose by 27.8 per cent due to higher take-up of mobile internet bundles and growth in its contract customer base.

Chief executive Vittorio Colao said: "We have achieved these results through our continuing commercial approach in key European markets, focusing especially on data, and from strong growth in emerging markets."

At Ericsson, net profit in the three months to April reached NKr1.9bn (198 million), up from NKr831m in the same quarter a year ago, following improved margins and a dramatic cut in costs as its savings plan reached its completion.

But the result still disappointed market watchers who had hoped for stronger sales, with revenue dropping to NKr48bn, compared with NKr52.1bn in the second quarter in 2009.

Highlighting a problem that rivals Nokia Siemens Networks and Alcatel-Lucent have also cited this year, Ericsson said an industry-wide scarcity of components and supply chain bottlenecks were weighing on turnover.