UPDATE: Vodafone Cuts Fiscal Year Net Loss, Emerging Mkts Strong

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LONDON (Dow Jones) Vodafone Group the world's largest mobile phone operator by sales Tuesday narrowed its net loss for the fiscal year and said that it is on track to achieve strong growth in emerging markets following recent acquisitions.

The Newbury, England-based mobile phone operator narrowed its loss attributable to equity shareholders to GBP5.43 billion in the 12 months to March 31, from GBP21.92 billion the previous year, helped by cost cutting in Europe and strong growth in emerging markets, such as Turkey, Africa and Eastern Europe.

Vodafone also increased its total dividend per share by 11.4% to 6.76 pence.

Mobile revenues increase 6.3% organically, taking its proportionate customer base - which accounts for customers in joint-ventures - to over 206 million.

At 1024 GMT, Vodafone's shares were up 7.1 pence, or 4.7%, at 158.5 pence.

On a conference call, Chief Executive Arun Sarin said that Vodafone had delivered, and in some cases exceeded guidance given 12 months ago, despite tough conditions in Europe.

"In Europe we are driving voice and data growth but these drivers are being offset by price pressures and regulatory conditions," he said.

The European Union last week decided to cap mobile phone roaming charges, which Vodafone estimates will cost it about GBP200 million to GBP250 million next year.

But Sarin said that he expects to see strong growth in high-growth, emerging markets, such as Turkey and India, where the company has recently made acquisitions.

Service revenue growth in the Middle East, Africa and Asia increased 43.5% in the year, primarily as a result of it increasing its stakes in its Vodacom joint-venture with Telkom in Africa, and other operations in Egypt and India.

Total revenues increased 6% to GBP31.1 billion from GBP29.35 billion, while the company narrowed its operating loss to GBP1.56 billion from GBP14.08 billion.

Seymour Pierce analyst Jim McCafferty said the 6.76p dividend was particularly impressive, showing an 11.4% annual increase.

"There are few stocks in the FTSE 100 (apart from BT) which offer such attractive dividend growth coupled with a high yield," the analyst said, maintaining an outperform rating on the stock.

Sarin said in the statement that the company had made good progress on its cost cutting and growth stimulation strategy. He said overall growth prospects for the group remain strong - despite expectations that the European market will remain challenging in the current year - following its $10.9 billion acquisition of a controlling stake in Indian operator Hutchison Essar.

"The last year has also seen a further reshaping of Vodafone's portfolio, with our acquisitions in Turkey and India further increasing the group's exposure to the exciting growth opportunities in emerging markets. We are well placed to continue delivering on our strategy," the CEO said.

Vodafone also guided for its current fiscal year, saying is forecasting group revenues to be in the range of GBP33.3 billion to GBP34.1 billion, with adjusted operating profit in the range of GBP9.3 billion to GBP9.8 billion.

In India, Vodafone also said that it expects to receive $1.6 billion by selling its 5.6% direct stake in the Bharti Airtel back to the Bharti. However, Arun Sarin said Vodafone would retain its 4.4% indirect stake in Bharti, to help incentivize the network infrastructure sharing agreement between Bharti and Hutchison Essar, which Vodafone now has a controlling stake in.

Vodafone earlier in May completed the $10.9 billion acquisition of a controlling interest in Hutchison Essar, following protracted regulatory scrutiny by Indian authorities.

Seymour Pierce's McCafferty said the results modestly beat Seymour Pierce's forecasts, while guidance for 2008 appears to be in line with expectations.

However, Morten Singleton, an analyst at WestLB said he might have to downgrade his forecasts after seeing the guidance.

Company Web site: http://www.vodafone.com

-By Daniel Thomas, Dow Jones Newswires; 44-20-7842-9264; dan.thomas@dowjones.com

(END) Dow Jones Newswires"

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