Vodafone adjusts operating profit guidance higher

Telecommunications provider Vodafone has this morning released its half-yearly results, while at the same time announcing a 7.0% increase in its interim dividend, to 3.05p, along with the payment of a special dividend of 4p.

Nonetheless, the latter was already announced in July and itself reflects the receipt of a dividend from Verizon Wireless.

Total revenue at the group level rose 2.2% in organic terms, to £23.52bn, or by 4.1% in reported terms.

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In greater detail, the group's organic service revenue rose by 1.3% in the second quarter, with a decrease of 1.2% in Europe but an advance of 8.2% in America and Asia Pacific.

Organic data revenue, meantime, increased 23.8% while enterprise revenue did so by another 2.6%.

The group has also highlighted "continued" strong momentum in emerging markets such as India, where service revenue rose by +18.4% or Turkey, which saw a +27.9% improvement.

First half EBITDA rose 2.3% to £7.5 bn, although its EBITDA margin fell 0.6 percentage points, to 32.0%.

Adjusted operating profit for the period has come in at £6.0bn, with the outfit now forecasting operating profits of between £11.4 and £11.8bn for the full year, in the upper part of its previous forecast.

Free cash flow generation was £2.6bn for the half year, with a target of between £6.0bn and £6.5bn confirmed for the full year.

Vodafone expects to pay a £2.0bn dividend at the beginning of 2012 and has already committed to a £4.0bn share repurchase programme.

According to the group's chief executive, Vittorio Colao, the firm continues to execute its strategy of concentrating on the highest growth and cash-generating business opportunities. At the same time, he believes that Vodafone has delivered on its commitment to, "crystallise value from our non-controlled assets through a successful programme of disposals and the announcement of a dividend from Verizon Wireless."

The British telecoms operator has become a favourite of UK pension schemes given its cash generation abilities and following British Petroleum's 'annus horribilis' last year, with the effect which that had on its dividend policy.

AB