Vodafone's confidence increases after return to growth in third quarter

Vodafone's organic service revenue returned to growth in the mobile phone company's third quarter, with a rise of 0.4% soundly beating analysts' expectations for a fall of 0.1% and bolstering confidence in the group's outlook.

Chief Executive Nick Read said there was momentum across the business, including in its largest market Germany.

"Our good trading performance underscores our confidence in the outlook for the full year," he said on Wednesday.

The world's second largest mobile operator reiterated its guidance for adjusted earnings for the year to end-March of 14.4 billion to 14.6 billion euros, compared with 14.5 billion for the previous year, and to generate at least 5 billion euros in free cash flow.

Vodafone's organic service revenue was down 0.4% in the second quarter and down 1.3% in the first quarter.

Read said the listing of the group's new infrastructure company Vantage Towers was firmly on track for early this year.

Vodafone has chosen a full bank syndicate for the listing on the Frankfurt exchange in March, Reuters reported on Tuesday, citing people close to the matter.

Germany produced the biggest quarter-on-quarter improvement among Vodafone's major European markets, with service revenue growing by 1.0% in the quarter. Broadband customers had upgraded to higher-speed plans during the pandemic, Vodafone said.

Analysts at JP Morgan Cazenove said Germany was a key beat in Vodafone's European markets.

Italy continued to be impacted by fierce competition in the low-value part of the mobile market, Vodafone said, while price competition in Spain was compounded by the impact of COVID-19 on roaming and visitor revenue.

Vodafone's shares, which were trading 15% lower than the level 12 months ago, rose 3% early on Wednesday to 132 pence.