UK-based mobile network operator Vodafone today reported a 3.9% rise in sales to £22.6bn, but its profits narrowed 14.1% to £5.2bn.
The company also announced the sale of its interests in Japanese technology conglomerate Softbank for £3.1bn. This followed the £4.3bn sale earlier of its interest in China Mobile, which represented a £2.4bn profit.
Vodafone is seeking to rationalise its portfolio holdings, which include a 24.4% stake in Polish mobile operator Polkomtel SA and a 44% stake in French telecom operator SFR.
Group CEO Vittorio Colao said the firm had returned to organic growth after renewing its strategy in the face of a deteriorating economic climate.
He said it would focus in future on markets in Europe, Africa and India, in growing the data component of revenues (especially through machine-to-machine communications and mobile banking), and in extracting more cash from its investments in US-based Verizon and SFR.
Colao said Vodafone's share of the free cash flow generated by Verizon and SFR was about £5bn, but it had received only £1bn in 2010. Verizon has not paid a dividend since 2006 as it sought to build a high-speed network for data rather than voice. "The opportunity for incremental value creation is therefore substantial," said Colao.
Vodafone's figures show that the mobile voice market in Europe has matured, but data revenues were up 23%. Colao said Europe showed "early signs of convergence" between fixed and mobile accounts. The company would continue to secure access to fast broadband to service enterprise and consumer markets, he said.
African and Indian mobile voice markets were still growing, but there was a pent-up demand for internet access that Vodafone could capitalise on, Colao said.
There were a number of new growth segments, notably machine-to-machine services and financial mobile services that it would "expand selectively into", he said.
Colao said Vodafone's profit outlook had been upgraded because of a better performance from Verizon. "We contimue to expect free cash flow in excess of £6.5bn," he said. He also expected organic sales to rise 1% to 4% a year for the next three years.