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Vodafone shares dip on results

Mobile giant disappoints City

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Vodafone shares suffered this morning as the City reacted to the mobile giant's results for the year ended 31 March 2004. Despite a reasonable set of numbers and the launch of a share buy-back scheme to increase control of its Japanese subsidiary, traders were unconvinced.

Vodafone shares were down four per cent in morning trading. This was despite Vodafone ringing up profits of £10bn for the year.

Group turnover was up ten per cent to £33.6bn and profit on ordinary activities increased 19 per cent to £10.0bn. Free cash flow increased by 65 per cent to £8.5bn.

Arun Sarin, CEO at Vodafone, said: "These results reflect a strong operational performance with an excellent level of free cash-flow generation... With the advent of our Mobile Connect 3G/GPRS datacard and Vodafone Live! with 3G, we are well positioned for a future of transition as we take the lead in expanding market boundaries through new technologies and industry partnerships."

The company set aside £3bn, on top of £1.1bn already spent, for buying back its own shares. Vodafone is still in third place in Japan, based on subscriber numbers, behind KDDI and DoCoMo. An analyst from ABN Amro told Bloomberg the company would be better off leaving Japan if it could not improve performance.

Vodafone gained 13.7m customers in the year, giving it a total of 133.4m on 31 March 2004. Arpu (Average Revenue Per User) was up four per cent in Italy and six per cent in the UK. But in Germany Arpu fell one per cent and in Japan it fell by seven per cent. Revenue from data services grew by 25 per cent to £4,540m.

Arun Sarin said he still wants to buy French mobile company SFR, despite majority-owner Vivendi rejecting previous offers.

Looking forward the company expects "high single-digit average proportionate mobile customer growth, leading to broadly similar growth in proportionate mobile revenues." ®

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