British telecommunications group Vodafone reported on Friday a forecast-beating organic service revenue results in its first quarter after strong performance in Italy and Spain as well as a step up in demand in Turkey but saw its overall revenue decline from the prior year.

Vodafone’s chief executive Vittorio Colao said that they made a good start to the year in Europe, where their commercial momentum is still going strong and growth accelerated across Africa, Middle East and Asia Pacific (AMAP) region.

Colao said that the current figures were positively in line with expectations and even though competition in India is still intense, service revenues of the company stabilized compare with the previous quarter.

Analyst George Salmon also sees Vodafone’s first quarter results to be encouraging for the European businesses adding that the company seems to be gaining a footing in the long-term pursuit to boost customer retention.



The London-based mobile operator’s organic service revenue in the first quarter ending June 30 gained 2.2 percent against 1.5 percent from past quarter as Europe grew 0.8 percent and AMAP rose 7.9 percent.  

The figure also surpassed analysts’ estimate of 1.4 to 1.9 percent encouraging Vodafone to revise its outlook for the whole year when it expects to raise core earnings by 4 to 8 percent.

Revenue in the AMAP region added 1.2 percent to €2.88 billion ($3.35 billion) from the past year while reported European revenue was down 4.8 percent to €8.30 billion ($9.66 billion).

Vodafone’s weak spot lingered in Europe as expansion in Germany halved from last quarter’s 1.2 percent to 0.6 percent and while improvements has been made in its troubled British market, it was still down by 2.7 percent.

The mobile operator’s overall current revenue also fell 3.3 percent to €11.47 billion ($13.27 billion) compared to €11.87 billion the same period last year showing the negative impact of forex rate movements and deconsolidation of Vodafone Netherlands.

Service revenue for the period dropped 4.6 percent to €10.28 billion ($11.96 billion).

India’s revenues remained low as well, losing 13.9 percent to €1.39 billion ($1.61 billion) on a year to year basis but steadied on the fourth quarter with Vodafone making some low-end share gains to ease constant unit price declines amid competition.

Colao said that it was also getting profitable market share in broadband, with 300,000 net new broadband customers accumulating to 15 million and 98 million potential households across Europe.

Last year, Vodafone struggled from added competition and tough new rules which led to an annual loss of €6.1 billion ($7.1 billion) after a write-down worth a €5 billion ($5.8 billion) on its Indian operations, where intense competition pushed the company to make a merger worth $23 billion with local rival Idea Cellular in March this year.

The company has slowly been fusing its operations. In May, it has announced plans for a €506 million ($588 million) merger of its local cable provider Melita in which it will acquire a 49 percent share.

Vodafone’s stock price in the London trading was up 1.1 percent to £227.60 on Friday while it gained 1.8 percent to $29.56 in NASDAQ pre-market trading.

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