Emerging market growth boosts Vodafone

Shares in Vodafone Group rose 2.58% on Thursday as the company reported a positive future outlook, although weakness in Europe continued to impact on revenues.

In the quarter ended 31 December 2013, group organic service revenue was down 4.8% to £9.86 billion, driven largely by a 9.6% fall in European organic service revenue. However, revenue from emerging markets made up some of the shortfall, with India up 13.2% and Turkey up 3.9%.

"Our emerging market businesses are growing strongly, supported by consistent execution and accelerating demand for data," commented chief executive Vittorio Colao.

"In Europe, conditions are still difficult, and we continue to mitigate these challenges through on-going improvements to our operating model and cost efficiency.

"In addition, the shift to 4G is gaining momentum and we have seen improving mobile customer net addition trends. We are therefore optimistic that our revenue performance will begin to improve as regulatory headwinds ease and customer appetite for video and content services increases."

Vodafone has now made 4G available in 13 countries and has around two million 4G Red customers in Europe.

Coloa also said the company had made "further progress" on the £7 billion organic investment strategy, Project Spring, with plans to select preferred vendors in February. The main aim of the strategy is to "accelerate and extend network and service differentiation".

He said the outlook for the full year was positive, with the company on target to deliver adjusted operating profit of £5 billion and between £4.5 and £5 billion of free cash flow.

"After the imminent completion of the Verizon Wireless transaction, we will be very attractively positioned, with a strong balance sheet, improved dividend cover and the financial and strategic flexibility to make further investments in the business or returns to shareholders in the future," he concluded.