Vodafone raises guidance, to sell Softbank interest

9th Nov 2010 06:21

Mobile phone giant Vodafone raised its profits forecast for the current year and vowed to get more cash out of its stakes in Verizon Wireless and SFR one way or another in a bullish half-year update.The firm now expects adjusted operating profit for the 2011 financial year will be in the range of £11.8bn to £12.2bn, up from its previous range of £11.2bn -£12bn.In the six months to September, profits jumped from £5.75bn to £8.24bn, including the gain on the sale of the China Mobile stake, on sales of £22.6bn against £21.8bn. Underlying operating profits beat broker forecasts at £7.4bn.Vodafone sold its China Mobile stake in September and intends next to sell an interest in Japanese bank Softbank for £3bn under the tidying up plan for its minority stakes.Group revenue increased by 3.9% in the half year, with improved organic growth trends in all of the regions, Vodafone said. In the second quarter, revenue growth sped up to 2.3%, 1.2 percentage points faster than the first three months, with data revenue growth of 25.9%.In Europe service revenue declined by 1.3%, though the decline slowed 0.8% in the second quarter, reflecting continued growth in Germany and the UK, an improved trend in Italy and continuing weakness in Spain. Data revenue growth in Europe was 23.2% and fixed line growth was 4.4%. Asia Pacific and Middle East service revenue increased by 22.2% reflecting a strong contribution from India. Chief executive Vittorio Colao reiterated that the future of the telecoms giant lies in data with the strategy going forward to include tiered plans and differentiated service levels as well as offering 'a balanced portfolio of smartphones and connected devices with all leading brands'.He also said Vodafone wants to tackle the lack of cash coming out of its 45% stake in Verizon Wireless and French business SFR. It received only £1bn last year against a proportionate entitlement of £5bn. "We will seek to maximise the value of non-controlled assets in a tax efficient manner either through generating liquidity or increased regular free cash flow," Colao said.Cash flow this year is predicted to be in excess of £6.5bn and should continue at that level through to 2014, reflecting organic revenue growth in the range of 1% to 4% per annum and stabilising margins.The interim dividend rises by 7.1% to 2.85p.