Vodafone dials up higher profits despite Covid headwinds

A drop in smartphone sales and lower revenues from roaming charges dents half-year profits

Vodafone has predicted higher annual profits despite being hammered by a global travel crackdown and a slump in smartphone sales.

The mobile titan now expects adjusted profit of between €14.4bn (£12.9bn) and €14.6bn for the 2021 financial year, up from the €14.5bn it made last year.

It brought in revenues of €21.4bn (£19bn) for the six months to the end of September, down 2pc on a year earlier, with adjusted profit slipping 1.9pc to €7bn. 

Income from roaming charges - the fees some customers pay when using their mobile phone abroad - were hit particularly hard as fewer customers travelled overseas at the height of the pandemic.

Investors cheered the better-than-expected performance, sending shares up almost 5pc in afternoon trading.

Vodafone's chief executive Nick Read has been attempting to boost growth by offloading fringe operations to focus on fewer international markets, and overhauling digital operations.

Mobile customers in Europe rose 2pc to 65m, with contract churn - the rate at which it is losing customers - easing from 15pc to 13pc. 

The German business notched up a 14pc rise in revenues to €6.3bn in the wake of its €18bn takeover of Liberty Global's German and eastern European cable companies. 

However, UK revenues dropped 5pc to €2.9bn, with Italy and Spain also falling by 7pc to €2.5bn and 5pc to €2bn respectively. 

Mr Read said the management's focus on embracing digital helped increase sales during the crisis, with the number of customers using its app up a third to 40m over two years.

Pre-tax profits also rebounded to €2bn for the period, up from a €511m loss the year before when Vodafone wrote off the entire value of its Indian joint venture. 

The FTSE 100 company has been locked in a battle with the Indian Supreme Court over the amount of money owed to the government by Vodafone Idea. 

The court had ordered Vodafone to pay about €7.6bn  of retrospective penalties and licence fees, but said in September it could repay in installments spread across a decade.

Vodafone will also give a full update on Tuesday for Vantage Towers, the company's mobile infrastructure arm that it will float at the beginning of next year but maintain a majority stake.

The move to list Vantage in Frankfurt at a potential value of more than €20bn is part of a growing trend among telecoms companies to cash in on their infrastructure. 

Mr Read said he was in advanced talks with O2 owner Telefonica to roll Vodafone's slice of their towers joint venture, CTIL, into Vantage Towers ahead of the listing.

Vodafone held the dividend year at 4.5 euro cents.