Demand for mobile data boosts Vodafone revenues

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Strong demand for mobile data has helped Vodafone increase its service revenues for the first time in 18 months, as its key markets recovered from recession.

Britain's third-largest mobile phone operator today reported a 1.1% rise in service revenues to £10.58bn in the last three months, reversing a trend that began in the final quarter of 2008. Revenue from data services such as smartphones and high-speed internet "dongles" jumped by 25%.

"These are the first quarterly results to show service revenue growth since the global recession impacted," said chief executive Vittorio Colao.

"We have achieved these results through our continuing commercial approach in key European markets, focusing especially on data, and from strong growth in emerging markets, with India now cash-positive at an operating level and our highest ever quarterly revenue in Turkey," he added.

Colao also said that Vodafone would announce a change of strategic direction in October, to "drive shareholder value". This is understood to include a new focus on data services, especially in emerging markets like India and China.

Colao declined to give further details this morning, saying it would be "disrespectful to his board", but hinted that it may be driven by the increased number of mobile operating systems on the market today.

"The world has changed," he told reporters. "Many operating systems are strong and competing … this is a good opportunity to have a look at our strategy."

Vodafone saw strong growth in demand for smartphones in Europe during the quarter, particularly in the UK where the company started selling Apple's iPhone earlier this year.

Since taking over as chief executive in summer 2008, Colao has been trying to increase growth in Vodafone's existing territories rather than continuing with the acquisition drive that has given it stakes in markets around the world.

Vodafone also announced today that it has finally resolved a long-running dispute with the UK tax authorities. This row centred on Vodafone's decision to register Mannesman, the German mobile giant it acquired in 2000, in Luxembourg.

HM Revenues & Customs had claimed that Vodafone owed taxes in Britain under the Controlled Foreign Companies rules, which the mobile operator disputed. It has now agreed to pay £1.25bn to settle the case, having previously made a provision of £3.1bn on its books.

Shares in Vodafone rose 1.88% this morning to 151.85p.