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Vodafone Operating Profit Increases on Job Cuts, Network Deals


Vodafone Group Plc full-year operating profit rose 1.7 percent as the world’s largest mobile- phone company cut jobs and signed network-sharing agreements with other operators to lower costs.

Earnings before interest, taxes, depreciation and amortization rose to 14.7 billion pounds ($21.2 billion) from 14.5 billion pounds a year earlier, the company said in an e- mailed statement today. Analysts had estimated Ebitda of 14.8 billion pounds, according to a Bloomberg survey.

The company also said today it targets an annual dividend per share growth of no less than 7 percent for the next three financial years.

Vodafone and rivals including Deutsche Telekom AG and Telefonica SA are reducing expenses to counter a slide in prices and sluggish demand for telecommunications services in some markets. Vodafone in November doubled its cost-savings target to 2 billion pounds by 2012. Vodafone and Telefonica last year agreed to share wireless network components to cut costs and improve coverage for more than 140 million of their users.

“Cost reduction targets were delivered ahead of schedule enabling commercial reinvestment to improve market share and further strengthen our technology platforms,” Vodafone Chief Executive Officer Vittorio Colao said in the statement. “We are creating a stronger Vodafone, which is positioned to return to revenue growth during the 2011 financial year, as economic recovery should benefit our key markets.”

Vodafone’s full-year sales rose 8.4 percent to 44.5 billion pounds. On an organic basis, excluding currency swings and acquisitions, sales fell 2.3 percent, the company said.

The mobile-phone company has expanded into emerging markets in the last four years to bolster growth with acquisitions in countries including Turkey, India, South Africa and Ghana.

Indian Impairment Charge

In India, the world’s second-largest wireless market by subscribers, Vodafone is facing increased costs for third- generation services. Bids for a license to offer faster wireless services reached the equivalent of $3.54 billion on the 31st day of an auction.

The company said today it took an impairment charge of 2.3 billion pounds as a result of the Indian auction.

Vodafone also has an option to acquire the remaining 33 percent stake in Vodafone Essar, the company’s Indian unit, for $5 billion this year.

Vodafone is also seeking the resumption of a dividend from its Verizon Wireless joint venture in the U.S. The company is in talks with partner Verizon Communications Inc. over options for Vodafone’s 45 percent stake, people familiar with the matter said in March. Colao has said he is open to “all possible situations.”