Vodafone results to boost UK funds

Vodafone has reported better-than-expected figures off the back of emerging market growth and the widespread popularity of smartphones, which is set to boost UK funds.

The company has announced a 3.2 per cent rise in annual revenues and increased pre-tax profit from £8.67bn last year to £9.5bn. Investors have also experienced a 7.1 per cent increase in their final dividend.

According to Financial Express data, 441 funds in the Investment Management Association (IMA) universe have Vodafone in their top-10 holdings.

Scottish Widows Ethical will receive a significant boost from the positive results. Managed by Johnny Russell, the fund has 9.9 per cent of its portfolio invested in the company.

Graham Spooner, investment adviser at The Share Centre, believes that the success of products such as the iPhone 4 have had a massive impact on profits.

"The company's 26.4 per cent increase in data sales shows the rise in demand for smartphones," he said. "Vodafone continues to maintain its leadership in this area through investment in the quality of its network."

Spooner says that Vodafone’s ambition for continued expansion into developing markets makes it a compelling company for investment.

"Continued plans for growth were seen in emerging markets, with service revenue in India increasing by 16.3 per cent and by 28.9 per cent in Turkey. This will continue to attract investors seeking international exposure," he added.

A recent Trustnet study has highlighted the need for investors to seek out companies that generate much of their revenue from overseas, due to the slow rate of growth and low consumer spending in the domestic market. The story of Vodafone this year reflects that theme.

"Ongoing economic difficulties affecting consumer spending has seen the company face challenging times in Southern Europe and it has booked a £6.15bn impairment charge on its operations in the region," continued Spooner.

"However, investors shouldn't be too alarmed as Vodafone has a strong global presence and has performed well in other regions. This means it has not significantly damaged overall figures."

"The 7.1 per cent rise in the final dividend and its efforts to strengthen its position in a challenging UK market mean we continue to recommend Vodafone as a 'buy' for medium-risk investors geared towards income."

"Investors will be keen to hear more about Vodafone's future sale of its 24.39 per cent stake in Polkomtel and will be interested in the Verizon Wireless potential dividend that is expected in 2012."