Vodaphone earnings soar past expectations

VODAFONE, the world's largest mobile phone operator by revenue, has posted higher than forecast third-quarter earnings – up 10.3 per cent to £11.5 billion – due to cost cuts and an improving picture in Europe.

Analysts said the improved trading in Europe, particularly the turnaround in Turkey, should boost sentiment after fears the recent revenue weakness was more structural than cyclical.

The shares rose 4 per cent in early trading, to top the FTSE gainers' list. They closed at 139.3p, up 3.6 per cent. "Vodafone results can often feel like a game of dodgems," said Bernstein analyst Robin Bienenstock. "This set of results is free of torpedoes and brings signs of cyclical recovery."

Vodafone said it now saw adjusted operating profit for 2010 in the upper end of its forecast range, due to lower depreciation and amortisation. It also lifted its free cash flow range by $500 million (317m) after an improvement in working capital.

Vodafone said its improved trading followed growth in Italy and improving trends in Britain and Germany, while Spain stabilised. Turkey returned to growth with a 12.9 per cent rise in service revenue.

Chief executive Vittorio Colao said: "Service revenue trends have improved with continuing growth in our data and fixed-line revenue. We are on track to deliver on our strategic priorities."