Vodafone's expectations exceeded as pre-tax profit hits £8.7bn

• Mobile giant's profits more than double as broadband sales increase. Picture: AFP/Getty Images

Progress on a 1bn cost savings programme and signs of improved revenue trends in key markets including the UK also lifted the world's second-biggest mobile operator.

But the company was impacted by a 2.3bn impairment charge on its Indian unit where fierce competition has hit progress.

Turnover increased by 8.4 per cent to 44.5bn in the year to 31 March, although was down by 2.3 per cent after excluding currency changes and acquisitions.

The group said sales in the UK fell by 4.7 per cent, with lower voice revenues and continued "intense" competition partially offset by higher messaging and data revenues.

With Vodafone the third network to muscle into the iPhone market, the decline in UK revenues for the last quarter slowed to 2.6 per cent from 3.2 per cent in the previous three months.

Vodafone's overall pre-tax profit figure of 8.7bn compared with last year's 4.2bn when bigger write-downs affected the bottom line.

The UK-based group, which has some 341 million subscribers, said its cost-savings programme was delivered a year ahead of schedule and a new two-year programme designed to save a further 1bn has been launched.

It also said it was increasing its final dividend by 9 per cent to 8.31p a share and for the next three years will increase the payout by 7 per cent per year.

Chief executive Vittorio Colao said the results "exceeded our upgraded guidance on all measures".

Vodafone said it expected a return to organic revenue growth in the current financial year, although it was dependent on the economic environment and the level of unemployment within Europe.

Speaking about the Indian market, Colao said that the country's rules which ban consolidation among operators did not make sense.

"India is a vast country with a vast population still not fully able to communicate. What India needs is investment and good technology and this will not come in an environment with too many operators and fragmentation of investment."

Analysts said the impairment charge in India, where the company has more than 100 million customers, indicated Vodafone had overpaid when it entered the market and said the problems overshadowed improvements elsewhere.

Jonathan Jackson, analyst at Killik & Co, said: "The main negative is India where the group has suffered in an intensely competitive market."

But he said the shares remained a buy. "We believe investors should take advantage of the attractive dividend yield and wait for the group to unlock value from its 45 per cent stake in Verizon Wireless and to achieve a turnaround of a difficult situation in India."