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Vodafone ups profit outlook, gets SoftBank payment

Vodafone ups profit outlook, gets SoftBank payment
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First Published: Tue, Nov 09 2010. 02 55 PM IST
Updated: Tue, Nov 09 2010. 02 55 PM IST
London: Vodafone, the world’s largest mobile operator by revenue, raised its full-year profit outlook and said it had agreed to sell its interests in Japanese carrier SoftBank for 3.1 billion pounds ($5 billion).
The British carrier, which recently sold its stake in China Mobile for $6.5 billion, said on Tuesday it would continue to dispose of assets it does not control, after some investors complained it was not delivering value.
Vodafone raised its guidance for the fiscal year to end-March, saying it now expected adjusted operating profit of 11.8 to 12.2 billion pounds, versus an earlier forecast of 11.2 to 12 billion pounds, after sales grew faster than expected.
First-half revenue rose 1.8% organically to 22.6 billion pounds, beating a Reuters I/B/E/S poll forecasting 22.3 billion pounds, as all regions performed well, including Verizon Wireless, its US joint venture with Verizon.
“We have also today announced an updated strategy, which positions Vodafone to realise further value from non-controlled assets, (and) take full advantage of the most valuable telecommunications growth opportunities ahead,” chief executive Vittorio Colao said in a statement.
Shares inthe group were up 2.11% to 178.70 pence at 01.06 pm.
Vodafone shares have risen more than 16% since the company announced its intention to update its strategy in July, with much of those gains coming since it sold its 3.2% stake in China Mobile in September.
Vodafone will receive the payment from SoftBank in two tranches: 212.5 billion yen ($2.62 billion) in December, which it will use to pay down debt, and 200 billion yen in April 2012.
The payment relates to Vodafone’s sale of its Japanese operations to SoftBank in 2006, as part of which Vodafone acquired loan notes and preferred stock and share acquisition rights issued by SoftBank subsidiaries.
Vodafone also said it would push the sales of data plans as demand for email and other mobile Web services accelerates, aiming to become the leading operator in mobile data in Europe, India and Africa.
On an annualised basis the group’s mobile data business has grown to nearly 5 billion pounds and fixed line revenue, primarily broadband, has grown to over 3 billion pounds. Vodafone’s total revenue last year was 44.5 billion pounds.
First-half core earnings fell 2.8% on an organic basis to 7.4 billion pounds, compared with a forecast of 7.3 billion pounds.
Vodafone took an 800 million pounds impairment for its operations in Greece, which is undergoing austerity reforms after being severely hit by the recession.
Organic service revenue, which is made up of revenue related to ongoing services, was up 1.7% and ahead of a Reuters poll predicting a 1.4% increase.
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First Published: Tue, Nov 09 2010. 02 55 PM IST