* Third-quarter organic service revenue rises 0.4%
* Analysts had expected a drop of 0.1%
* Trading performance underpins confidence in outlook
* Shares rise 3%
(Adds analyst reaction, shares)
By Paul Sandle
LONDON, Feb 3 (Reuters) - 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.
(Editing by Kate Holton, James Davey and Jane Merriman)