Vodafone's Pragmatic Approach

Vodafone's results - at www.moneyweek.com - the best of the international financial media

Mobile phone giant Vodafone has shown its best growth in five years, securing some 4m new customers in its first quarter. As a result, Vodafone's global subscriber base is now more than 165m, boosted largely by Vodafone's acquisitions in both Romania and the Czech Republic.

Why is the news so good for Vodafone? Because the mobile phone market is getting increasingly competitive and even more mature, says Kirstin Ridley on Reuters.co.uk. And despite this, Vodafone managed to add subscribers in markets like Germany, where 500,000 new subscribers came on board, and America, which snagged 850,000 new clients. Even in Britain, the group won 165,000 customers, beating market forecasts. Investors were certainly thrilled by Vodafone's surprisingly upbeat results: they pushed the group's share price up more than 1%, to close at a new-year high at 145p.

In fact, European mobile has managed to mature "much less violently than many feared", says Lex in the FT. While Vodafone showed organic sales growth of 8.6% in the three months to June, the sector as a whole also saw top line growth of 7% in its first quarter.

Yet Vodafone is not without its problems. Its Japanese operations, where the increasingly tough market includes heavyweights such as NTT DoCoMo, continues to struggle. Here annual Average Revenues per User (ARPU) fell from $664 to $657 while customer numbers fell by 72,000. The good news is that Vodafone chief executive Arun Sarin has said that his company wasn't "married to any asset" in Japan, hinting that he could potentially sell-off the unit. This is a good sign, says Ridley: the comments are Sarin's "most pragmatic" to date.

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