Vodafone has made good calls in emerging markets

If there were any doubt about the credit crunch hitting the high street, the grisly headlines of the past few weeks have firmly dispelled it. In such a turbulent financial environment, established stocks such as BT are traditionally regarded as a safe haven.

But investors with an eye for telecoms might do better to turn towards the mobile sector and its flagship player, Vodafone.

Likes its landline peer the group, which boasts 241 million global subscribers, offers the reassurance of ‘sticky’ customers: While its average revenue spend - currently around £24 a month in the UK - may slow if a finanical downturn does take hold, it would require nothing short of financial Armageddon for most of us to give up our mobile subscriptions.

But while BT struggles to convince many investors that its ambitions for serving global corporates as a multinational IT player can be pulled off – it has yet been unable to report progress towards a 15 per cent profit margin target for its Global Services division – Vodafone has two convincing growth paths opening up to it.

It does however mark a turning point in Vodafone’s future prospects, giving an indication that consumers are finally banishing their reluctance to spend on more lucrative services instead of just calling and texting.

In the current environment the group’s diversified geographic portfolio and critically its exposure to markets outside of the UK and US is also a strong plus point While a foothold in such markets does not come cheap – it splashed out $11.1 billion for a 67 per cent stake in Hutchison Essar, India’s fourth-biggest mobile operator, earlier this year – Vodafone has presented convincing evidence of a significant payback.

In contrast to the 2 per cent revenue growth in Europe at the half year, revenues in Vodafone’s emerging markes regions jumped an impressive 39.9 per cent.

Vodacom, in which Vodafone is desperately seeking to boost its 50 per cent stake, recently reported an envious 15.1 per cent growth in profit – the kind of double-digit growth associated in the UK with the mobile heyday of the late 1990s.

At 183.20p, up 29 per cent in the year, the group trades at 16 times next year’s earnings.