Vodafone dials up growth

Vodafone, which has 454m mobile customers and operations in more than 20 countries, has faced mounting competitive pressures. Industry giant BT looks set to acquire EE - the UK's largest mobile carrier - while rivals Three and O2 are keen to tie the knot. Moreover, pay-TV and broadband giant Sky plans to roll out a mobile service in 2016. Vodafone is banking on Project Spring, its two-year investment programme, to bolster its competitive edge. The initiative has seen the group expand its high-speed '4G' wireless coverage, modernise and extend its mobile and fibre networks, roll out enterprise offerings internationally and spruce up its stores.

Management has also sought to revive growth through acquisitions and product launches. Following the recent takeover of Kabel Deutschland, Vodafone launched an integrated fixed, mobile and TV service called RedOne in Germany. Similarly, it built on its purchase of Ono by offering a combined cable, mobile and TV service in Spain. The group recently introduced consumer broadband in the UK, and plans to roll out TV services early next year. And its bets on emerging technologies continue to pay off - machine-to-machine sales leapt 26 per cent to £224m.

The upshot was that despite fierce competition and onerous regulation organic service revenues rose in seven of the 13 European countries in which Vodafone operates. That reflected strong demand for high-speed mobile and broadband services as well as network expansion - the group increased its 4G user base by 48 per cent to 29.9m. Brisk demand also fuelled a 9 per cent rise in organic cash profits in Africa, the Middle East and Asia Pacific.

Prior to these results, broker Jefferies expected pre-tax profits of £1.51bn for the year to March 2016, giving EPS of 3.22p (£2.22bn and 5.55p in FY2015).