Vodafone beats forecast but may sell Japan arm

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Vodafone, the world's largest mobile phone operator, on Monday hinted that it would consider selling its troubled Japanese business if the new management team failed to turn it around.

Arun Sarin, chief executive, said that he would “obviously listen” if the company received an approach, but insisted that he was happy with the team under Bill Morrow, the former head of the UK business who was parachuted into the troubled subsidiary three months ago.

“The management team in Japan is doing a very good job and we are on track with the turnround programme,” Mr Sarin said. He has promised to turn the business around by the end of the current financial year, which runs to March 2006.

Mr Sarin also reiterated his desire to take control of Polkomtel, Poland's third largest operator, in which Vodafone has a 19.6 per cent stake, but said there had been no progress in talks with the other shareholders, which include the Polish government.

The comments came as the company reported subscriber growth figures for the first quarter to the end of June. Vodafone beat market expectations by adding 4.1m net subscribers in the quarter through organic growth, a rise of 35 per cent. It was Vodafone's strongest quarter for organic growth since 2000. Analysts had forecast net additions before acquisitions of 3.1m.

Mr Sarin said this equated to revenue growth of 8.6 per cent, towards the top end of its guidance given this year, and the group reiterated its guidance for the year.

The 6m customers added following two acquisitions in Romania and the Czech Republic take Vodafone's proportionate customer base (allowing for its share in joint ventures minority holdings) to more than 165m.

Mr Sarin said growth of its latest 3G handsets was “building momentum” with more than 1m registered devices added in the quarter, bringing the group total to 3.3m (including more than 300,000 data cards).

The global scale of Vodafone's business means its figures are closely watched by the industry and investors, amid concerns that operators will struggle to secure a decent return on the money spent on rolling out 3G.

Vodafone reported strong performances in the Spain and Germany where it has full ownership as well as at Verizon Wireless in the US, in which it has a 44 per cent stake.

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