Emerging markets boost Vodafone and Teliasonera

LONDON/STOCKHOLM (Reuters) - Strong demand from fast-growing markets abroad and from internet users helped mobile carriers VODAFONE (VOD.LO)and TELIASONERA (TLSN.ES)lift sales last year and give confident outlooks for 2011.

Vodafone, the world's largest mobile operator by revenue, nudged up its full-year profit forecast on Thursday, while Sweden's TeliaSonera cheered investors with a $1.6 billion share buyback, lifting its shares 2.9 percent.

Vodafone's service revenues rose 2.5 percent, in line with market expectations, thanks to strong demand in India and some improvements in Europe, although analysts said concerns remained about business in its home continent.

The British-based firm said it now expected adjusted operating profit for the year to end-March to be toward the upper end of its previously stated 11.8 to 12.2 billion-pound range ($19.1 to $19.8 billion).

But Vodafone shares were down 0.9 percent at 175.5 pence by 3:34 a.m. ET, the weakest performer in a flat Stoxx 600 Europe telecoms sector index.

Liberium Capital analyst Mark James said the headline numbers were good but noted that Europe was still tough and particularly so in Spain.

Service revenue at Vodafone's Africa, Middle East and Asia Pacific division was up 9.3 percent on an organic basis, but European service revenue edged up only 0.2 percent.

SMARTPHONES

Both Vodafone and Teliasonera said they had benefited from increased demand for Internet services on the go. Operators initially struggled to profit from the explosion in mobile data usage but many, including Vodafone, are now retreating from flat-rate tariffs.

Vodafone's data service revenues rose 27 percent, while Telia said seven out of every 10 phones it sold in Sweden were now smartphones, whose users spend more time surfing and using premium services, boosting revenues.

Vodafone Chief Executive Vittorio Colao said: "Our performance has been driven by the effective execution of our strategy to strengthen our businesses and deliver growth, particularly in data services and emerging markets."

TeliaSonera, Europe's fifth-biggest operator by market value, said it expected sales in local currencies excluding acquisitions to grow 4 percent this year, though the strong Swedish crown could impact reported figures.

"This will mainly be driven by mobile data in the Nordic region, increased market share in Spain and higher mobile penetration in Eurasia," the company said in a statement.

TeliaSonera's sales, up 4.2 percent to 27.8 billion Swedish crowns ($4.34 billion) were in line with forecasts.

Earnings before interest, tax, depreciation and amortization (EBITDA) excluding one-offs were 9.0 billion crowns, in line with expectations and flat year-on-year.

Vodafone's improved outlook followed solid trading in its fiscal third quarter, with strong growth in India and Turkey and improvements in Britain, Germany and South Africa.

The improved performance boosted group service revenue 2.5 percent to 11 billion pounds ($17.8 billion), compared with a Reuters poll forecasting 10.9 billion pounds. Total revenues rose 3.5 percent organically to 11.89 billion pounds.

The United States, where Vodafone has a joint venture with partner Verizon, enjoyed strong customer demand.

TeliaSonera, which has seen a growing share of income in recent years from markets like Kazakhstan, Uzbekistan and Azerbaijan, said costs would grow less than sales, and its core profit margin should rise compared with 2010.

On Thursday British fixed-line operator BT reported a 7 percent increase in its third-quarter core profit as it continued to cut costs.

($1=.6168 pounds)

($1=6.406 Swedish Crown)

(Writing by Georgina Prodhan; Editing by Greg Mahlich)