Vodafone Group (VOD)


Slower growth for Vodafone

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Sales growth at Vodafone (VOD) slowed in the first quarter as its markets in Spain and Italy were hit by poor economic conditions.

The telecoms giant said group service revenue rose by 0.6% in the period to the end of June, down from growth of 2.3% in the previous quarter, while excluding mobile termination rate cuts, growth was 2.3%.

There was stronger performance for its Verizon Wireless business where service revenue grew 8.2%, driven by data.

The group continued to see strength in Germany and in its emerging markets including India and Turkey, but this was no longer enough to offset the gloom in Europe and the UK.

It took a £4 billion write-down on the value of its assets in Italy, Spain, Portugal and Greece in May.

There was £0.9 billion of free cash flow after capital investment of £1.1 billion, while net debt reduced to £22.7 billion after receipt of final SoftBank proceeds (£1.5 billion) and £0.8 billion of share buybacks (£6.8 billion share buyback programmes were almost complete).

The figures were in sharp contrast to the previous year, when shareholders received a record dividend - something which is unlikely to materialise this year, not least because of the of £1.048 billion bill for Cable and Wireless Worldwide (CW.).

Even so, the group said trading in the first quarter was consistent with management's expectations and confirmed its outlook for the 2013 financial year.

"Despite the difficult market conditions, particularly in southern Europe, we continue to make progress in the key areas of data, enterprise and emerging markets, while maintaining tight control of our cost base. We remain focused on driving through significant improvements to our customers' experience through our ongoing investment in our networks, stores and IT platforms," said chief executive Vittorio Colao.

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