* First-half core earnings up 1.9 pct, beating expectations
* Second-quarter organic service revenue growth accelerates
* Wants tighter regulation of former incumbents in Europe
* To switch to reporting in euros in 2017 financial year (Adds CEO comments, analyst reaction, shares)
By Paul Sandle
LONDON, Nov 10 (Reuters) - Vodafone's first-halfearnings rose for the first time in four years after investmentin faster 4G networks started to pay off and full-year resultsmay be better than forecast, the company said on Tuesday.
The world's second biggest mobile phone company has spentbillions of pounds on its networks over the past two years andcan now offer faster 4G services to 80 percent of its customersin Europe when the economic climate is steadily improving.
Chief Executive Vittorio Colao said Vodafone's underlyingservice revenue grew in seven out of 13 European markets in thefirst half, with southern Europe in particular showing a strongrate of recovery.
"We have reached an important turning point for the groupwith a return to organic growth in service revenue and EBITDA(core earnings) in the first half," Colao said.
Vodafone shares rose 5 percent to an eight-week high of 225pence by 1047 GMT after the first increase in first-halfearnings since its 2011-12 financial year.
Vodafone's core earnings, or earnings before income tax,depreciation and amortisation (EBITDA), for the six months tothe end of September rose 1.9 percent to 5.79 billion pounds,beating analyst expectations of 5.69 billion.
Underlying second-quarter service revenue, on alike-for-like basis and stripping out currency changes, climbed1.2 percent, better than a 0.8 percent rise in the first quarterand above the 0.9 percent analysts were expecting.
Colao said markets remained competitive, however, and whilethe trend in Europe was improving, service revenue there stillfell in the three months to the end of September.
The company said it now expects full-year earnings to comein between 11.7 billion and 12.0 billion pounds, raising thefloor of the forecast range from 11.5 billion.
Analysts at Jefferies, calling the numbers "encouraging",said Vodafone still envisaged improving service revenue trendsin the second half, and it sounding notably confident ofimprovement in Germany.
MOBILE, INTERNET AND TV
Investors are looking closely at Vodafone's performance inmarkets such as Germany, Spain and Britain after its talks withcable operator Liberty Global about an exchange ofassets were abandoned in September.
With the Liberty talks dropped, Colao said Vodafone wouldcontinue to develop its own services combining mobile, broadbandand TV content in Spain, Portugal, Italy and Germany.
Colao said Vodafone's mobile networks were at least as goodas European rivals but former monopolies such as BT andDeutsche Telekom had an unfair advantage in beingable to use old copper technology, which was often funded bytax-payers, when rolling out combined services.
"There is a clear agenda on the part of these companies toundo 30 years of customer choice, re-establish their formermonopolies and make it very difficult for other players tocompete," he said.
BT has been cleared to buy leading mobile operator EE, whichwill result in owners Orange from France and DeutscheTelekom holding stakes in the former British monopoly provider.
Colao said European regulators needed to favour investmentin fibre networks and to consider imposing stronger operatingconditions on the owners of legacy networks.
Taking into account currency movements, Vodafone said growthin the period was dampened. It said it would start reporting ineuros rather than sterling from the 2017 financial year, a moveit said was logical as half of its revenues were in euros.
It also reiterated it had started preparations to float itsIndian unit, potentially in its next fiscal year, Colao said. (Editing by David Clarke)
Vodafone (VOD)
