Vodafone looks to smartphones for increased revenue

The operator thinks up to 40 percent of phones sold will soon be smartphones

Vodafone reported Thursday that revenue from data services exceeded £1 billion (US$1.58 billion) for the first time during the last three months of 2010, but that only partially helped offset lower voice revenue.

The mobile service provider reported revenue of £11.5 billion, a year-on-year increase of 10.3 percent, for its fiscal third quarter, which ended Dec. 30.

However, organic growth -- which excludes favorable exchange rates, for example -- was down 2 percent, according to Vodafone. It does not report profit on a quarterly basis.

Still, the results represents a good step forward, Vodafone CEO Vittorio Colao, said during a conference call.

Data revenue continues to grow, and organic mobile Internet revenue was up by 27 percent in Europe between October and December. But today that only partially offsets lower voice revenue, which continues to be impacted by market and regulatory pricing pressures, according to Vodafone.

Data revenue is driven by connected laptops and smartphones. During Vodafone's fiscal third quarter 25 percent of the phones it sold were smartphones, compared to 20 percent during the second quarter. That share will continue to grow, according to Colao, and its data revenue along with it.

During Vodafone's fiscal 2010 and 2011, which starts April 1, the share will grow to between 30 and 40 percent, he said.

Today, data revenue represents about 10 percent of Vodafone's total service revenue, compared to approximately 70 percent for voice.

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