London: The world’s largest mobile phone company, Vodafone Group Plc., may report a full-year profit because of rising sales in India and Turkey and increased demand for wireless Internet services.
Net income was 6.35 billion pounds (Rs54,039 crore today), against a loss of £5.43 billion a year earlier, according to the average estimate of 13 analysts compiled by Bloomberg. Sales for the year ended March rose 14% to £35.4 billion, based on 28 estimates. UK-based Vodafone reports results on 27 May.
Chief executive Arun Sarin expanded Vodafone the past two years in Turkey and India, the fastest growing of the world’s Top 20 mobile phone markets, by buying stakes in wireless operators. The purchase of Tele2 AB’s Spanish and Italian broadband units as well as mobile Internet and email services helped revenue.
“India has been steady growth,” said John Davies, an analyst at Dresdner Kleinwort in London, who rates Vodafone “buy”. “There is still plenty of ground for optimism in data growth, but whether it comes through now, we’re not sure,” he added.
Of the 31 analysts covering Vodafone in the past six months, 21 recommend buying the stock, six advise selling and four rate it “hold”, according to data compiled by Bloomberg.
Vodafone spokesman Simon Gordon declined to comment on the estimates.
Annual earnings before interest, taxes, depreciation and amortization rose to 13.1 billionpounds from 11.96 billion pounds a year earlier, according to the average of 22 estimates. Vodafone had a £3.5 billion charge the previous year after Italy abolished fees for recharging prepaid cards.
The company has bought assets in emerging markets to make up for slower growth in Europe, and this month reiterated its interest in raising the 50% stake it holds in Vodacom Group Ltd, South Africa’s largest mobile phone company. Telkom South Africa Ltd, which owns the rest, began a strategic review in June and said it would consider selling its Vodacom stake. In November, Telkom abandoned talks to sell its mobile and fixed-line phone assets to Vodafone and MTN Group Ltd.
Vodafone had purchased a 52% stake in Hutchison Essar Ltd, now India’s third largest wireless operator, for $10.7 billion (Rs46,224 crore today) in May 2007. Vodafone had bought Turkey’s Telsim Mobil Telekomunikasyon Hizmetleri AS for $4.55 billion in 2006.
In November, Vodafone raised its sales and profit forecasts on faster growth in India and Turkey, as well as higher revenues from wireless Web access in Europe. Two months later, the company said third quarter sales from wireless services rose 4.2%.
The results may also have been helped by gains in the euro versus the pound. Vodafone generates more than 50% of its operating profit in euros, JP Morgan Cazenove Ltd analyst Paul Howard wrote in a note this month.