If China Mobile (NYSE:CHL) is still the darling of the global telecom industry, then Vodafone (NYSE:VOD) is the last-season ringtone that no one wants to be caught dead sporting. Despite that, I think it's time for investors to dial back into the Vodafone story.

Are Vodafone's troubles over?
There are good reasons why the U.K. operator's shares have fallen 35% over the past year. Its earnings for the half-year that ended in March were down more than 70% year over year. That's mainly due to poor results in its core European markets, such as Spain and Turkey, where the company has taken massive impairment charges during the past year. In Spain, Vodafone's market share is now expected to drop to 28% by 2013 -- 3.5 percentage points lower than its current share, and far less than previous forecasts, according to IE Market Research.

But while Europe remains a challenge for Vodafone, its recent results don't fully account for the phenomenal rise of the euro versus the pound, which translates into higher earnings for the British company. Despite a recent rally, the pound has lost roughly 10% of its value against the euro, and has been weak against most other currencies as well.

That boost could continue as European consumer confidence picks up, with one survey showing the best readings since November. Meanwhile, the British economy continues to suffer from underconfidence and a possible downgrade of the U.K.'s government debt. A strong euro should help Vodafone's European business hold its own during tough times.

It's not just about forex
More importantly, Vodafone is putting its best foot forward elsewhere in the world. Down under, Vodafone Australia's recent merger with the Australian operations of rival Hutchison Telecommunications (NYSE:HTX) combines the No. 3 and No. 4 players in the Australian telco market. Moreover, investors are showing healthy interest in Vodafone, as a recent sale of senior unsecured notes earlier this month went well and raised $2.5 billion in new capital.

Moreover, Vodafone's joint venture with Verizon (NYSE:VZ) continues to be successful. Verizon Wireless was moving Research In Motion's (NASDAQ:RIMM) Blackberries well in the first quarter, thanks largely to its buy-one-get-one package-deal.

With a 6.3% trailing dividend yield, Vodafone ranks among the favorite dividend-paying picks for the 135,000-plus Motley Fool CAPS members. Its shares are still down some 5% for 2009, even as much of the market looks increasingly overbought.

In the telecom space, Vodafone may have little of the glamorous appeal that Sprint Nextel (NYSE:S) or Apple's (NASDAQ:AAPL) iPhone enjoy. But Vodafone does look like a cheap way to get ahold of some nice capital growth and income going forward.

Apple is a Motley Fool Stock Advisor pick. Sprint Nextel is a Motley Fool Inside Value selection. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Daniel M. Harrison owns no companies mentioned in this article. The Motley Fool has a disclosure policy.