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Is Vodafone the first recipient of the weak pound?

It has been revealed today that mobile telecom giant Vodafone could benefit to the tune of £500 million in relation to its profits for the current year, purely because of the devaluation of sterling. The company has announced an increase in profit forecasts from £11.5 billion to £12 billion as 96% of the company's profits are in foreign currencies with are benefiting from a weaker sterling.

In many ways this masks the underlying trend with the company's operations where organic revenue has declined by 1% even though actual revenue has increased by 14.3% to £10.47 billion for the final quarter of 2008. Like each and every business around the globe, Vodafone is looking to cut costs with a target of £1 billion a year by March 2011.

The mobile phone industry has in general been one of the main victims of the economic downturn because while mobile phones have become something of incessantly the growth in handsets and contract sales has started to slow. This may well induce a serious promotional and marketing campaign for the likes of Vodafone which could increase customer numbers at the expense of profit margins. Even though this time Vodafone has been saved by the weaker pound, there would appear to be difficult times ahead.

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