Vodafone (NYSE: VOD) reported a 14 percent rise in third quarter revenue, boosted by the flagging pound and higher sales from India. The world’s largest mobile phone operator said sales in the quarter ended 31 December increased to £10.47 billion ($14.9 billion) from £9.16 billion ($13.06 billion), in the same period a year ago, beating analyst expectations. A Bloomberg survey of six analysts had forecast sales of £10.29 billion ($14.7 billion).

On an organic basis, revenue fell 1 percent, with Europe especially hard hit. Declines in Europe, however, were offset by Asia Pacific & Middle East and Africa & Central Europe. India performed especially well, with service revenue growing 29.6 percent at constant exchange rates to £674 million ($961 million). Vodafone now counts a mobile customer base of 289 million as of 31 December 2008, up 9.5 million in the quarter.

The pound’s continuing predicted weakness prompted Vodafone to raise its forecast for sales and profit. The global carrier now expects full-year adjusted operating profit of £11.5 billion ($16.4 billion) to £12 billion ($17.1 billion) on sales of £40.6 billion ($57.8 billion) to £41.5 billion ($59.1 billion). In November, it had forecast adjusted operating profit of £11 billion ($15.7 billion) to £11.5 billion ($16.4 billion) on sales of £38.8 billion ($55.3 billion) to £39.7 billion ($56.5 billion).

Earnings Highlights:

Data and Messaging: As voice revenue declined 3.1 percent, group data revenue surged 25.3 percent on an organic basis, climbing to £786 million ($1.12 billion). Data revenue remained one of the few bright spots in Europe, where service revenue fell 1.4 percent on an organic basis. Messaging, however, remained flat, rising 0.3 percent to £1.149 billion ($1.63 billion).

Average Revenue Per User (ARPU): More troubling, ARPU was down across the group, even among the more valuable contract customers. In the UK, ARPU was £21 ($29.8), down from £22.5 ($32) compared to last year, and down from £22 ($31) sequentially. Even India saw ARPU slip, coming in at 297 rupees ($6.08), compared with 349 rupees ($7.15) a year ago, and 305 rupees ($6.25) a quarter ago.

Cost Savings Update: In November 2008, Vodafone said it had embarked on a cost saving program with the goal of reducing operating costs £1 billion ($1.42 billion) by the 2011 financial year. The company said “good progress has been made,” so far, with approximately £500 million ($710 million) cost savings expected to be generated by the end of the 2010 financial year, and the full £1 billion ($1.42 billion) savings expected to be generated by the 2011 financial year.

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