British cellphone company Vodafone has halved its pre-tax loss and increased underlying profits, raising hopes of a recovery in the telecommunications industry.
Vodafone`s performance boosted sentiment in Europe yesterday. Telecoms and chemical shares led the main European markets higher.
Wall Street also took heart from the results, as well as upbeat forecasts from Cisco.
Vodafone achieved a lb4.25 billion profit on ordinary activities before tax, goodwill amortisation and exceptional items in the six months to end-September, a 41% increase from the same period a year earlier.
Analysts had been expecting profit of about lb3.6 billion.
A pre-tax loss of lb4.37 billion was a 55% improvement, despite the fact that the group amortised goodwill on companies bought during an aggressive acquisition drive in the 1990s.
Basic earnings per share rose 31% to 3.28p (2001: 2.51p) before amortisation and exceptional items. Including the effect of these items, the group recorded a loss per share of 6.36p (14.36p loss).
Statutory turnover rose by lb5.99 billion to lb14.9 billion.
"Turnover increased as a result of the increased average customer base and improved levels of usage, although this was partly offset by reductions in call termination rates in certain of the group`s markets," says CE Chris Gent.
The Middle East and African operations achieved statutory turnover of lb143 million, a 15% decline, while operating profit rose 6% to lb88 million.
"In SA, Vodacom continued to grow strongly with a 23% proportionate EBITDA [earnings before interest, depreciation, taxation and amortisation] improvement and customer growth of 9% to 7.13 million." Vodafone owns 31.5% of Vodacom.
"Additionally, Vodacom`s operation in Tanzania is now contributing a positive operating profit in its second year of operation."
Commenting on the outlook for the full year, Gent says the double-digit proportionate revenue growth achieved in the first half is expected to continue.
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