Vodafone UK: Cheaper bills for customers who receive ads

Vodafone said today UK customers would be offered cheaper services if they were willing to allow advertisements to be sent to their mobile phones.

The Newbury-based company unveiled an alliance with internet firm Yahoo! At the same time as it said group underlying profits rose 7.5% to £5.1bn (€7.5bn) during the first six months of the year to September 30.

Vodafone will work with the Yahoo! Sales team to roll out carefully selected adverts on a range of products to customers who agree to receive messages.

The announcement came as the firm reported UK revenues had slipped by almost 1% to £2.5bn (€3.7bn) during the six months to September 30.

The Yahoo! Deal follows last week's news that the company had joined the battle for broadband business by unveiling details of its £25-a-month Vodafone at Home service.

The agreement is aimed at creating a fresh revenue stream in a cluttered market which is under intense competition from rival mobile firms.

Chief executive Arun Sarin said Europe remained very competitive, as Vodafone reported falling revenues in the UK, Germany and Italy.

However, it had been offset by powerful growth in developing markets while the mobile phone operations at the US firm Verizon Wireless - in which Vodafone holds a stake - had performed strongly.

There has been revenues growth in a number of new markets including Egypt, South Africa, Romania and Czech Republic.

Vodafone reported bottom-line losses before tax of £3.3bn (€4.88bn) during the six month period, compared to a £3.9bn (€5.76bn) profit last year.

Although it was helped by a 4% increase in revenues to £15.6bn (€23bn) compared with the same period last year, thanks to powerful progress at its Spanish operation.

Back in the UK, an increase in people sending texts helped boost messaging revenues by 2.9%, while it said an exclusive deal with Phones 4u to supply contract mobile phones would deliver "greater value" to customers.

Vodafone recently completed the sale of its Japanese arm and off-loaded its 25% in Proximus in Belgium for €2bn as the focus switched to other regions.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: "Despite posting an overall loss due to the German and Italian impairment charge, at the earnings level these numbers are at the top end of expectations.

"Perhaps a wind of change is blowing towards Vodafone. It has been a beleaguered company with a beleaguered CEO and, over the last year, the shares have underperformed the wider market by some 20%.

"However, fundamental changes to its strategy - exiting saturated markets and chasing ones with growth potential, especially the emerging economies - is beginning to bear fruit, as is its decision to retain its stake in Verizon in the US."

Shares were up almost 2% - or 2.5p - at 138.5p today.