Vodafone, the world's largest mobile phone group by sales, increased its full-year guidance on Tuesday due to favorable foreign exchange movements and said customers had continued to use mobiles during the downturn, reported Reuters.
The news, combined with Vodafone (VOD.L) just beating its third-quarter revenue forecasts, sent shares in the group up over 6 percent higher.
Vodafone also said it was making good progress with its wide-ranging cost-savings program but said this would inevitably result in some job losses.
The results were based on good performances from Germany, Italy, southern Africa and India, stabilization in Britain and weakness in Romania, Spain and Turkey, which were described as intensely competitive.
Customers' use of their phones was up, with a 10.3 percent rise in minutes, due to some lower prices. It had 289 million customers, including those from its affiliates.
The use of mobile data, to send emails, pictures and access the Internet, was up 25.3 percent on an organic basis. Handsets from the lower and higher end of the market both sold well, with the Blackberry (RIM.TO) Storm phone particularly strong.
Chief Executive Vittorio Colao said the results were in line with his new strategy which he introduced in November, to focus on customer value offers, mobile data, business customers and fixed broadband.
The group posted an increase in revenues in the quarter ending December 31 of 14.3 percent to 10.47 billion pounds, boosted by exchange rates. Revenues were down 1 percent on an organic basis.
Analysts had been expecting group revenues of 10.37 billion pounds ($14.68 billion) according to a Reuters poll of 9 analysts.
Vodafone cut its full-year revenue outlook in November when it reported its half-year results, but still managed to please investors when it said it would maintain profits and boost free cash flow by cutting 1 billion pounds of costs.
On Tuesday it increased the reported guidance due to foreign exchange movements but confirmed the underlying ranges.
"Our underlying performance showed similar trends to the previous quarter," Colao said. "In the context of the current economic environment, we have continued to implement our strategy.
"We have also made progress on our plans to reduce costs by 1 billion pounds by March 2011. Underlying guidance is confirmed."
Analysts at UBS said the revenue figure was 1 percent ahead of consensus.
"The improvement in Italy was expected," they said in a note to clients. "But slowing declines in Germany and particularly the UK are a surprise -- slowing voice price declines and solid data growth appear to have boosted numbers."
For the year ending March 31, Vodafone now expects a revenue range of 40.6 to 41.5 billion pounds, from a previous range of 38.8 to 39.7 billion pounds.
Adjusted operating profit is now forecast to be between 11.5 and 12 billion pounds, from the previous range of 11 to 11.5 billion pounds and free cash flow is forecast at 5.5 to 6 billion pounds, from the previous 5.2 to 5.7 billion pounds.
In an update on the cost-savings program, the company said good progress had been made and cost savings of approximately 500 million pounds were expected to be generated by the end of the 2010 financial year.
The remainder is expected to be generated by the 2011 financial year.
Coloa told reporters the cost cuts would be wide spread, including network rationalization, technology, logistics and advertising. He said it would inevitably result in an impact on the headcount but declined to give any further details.