Vodafone rallies as first-quarter service revenue beats expectations

24th Jul 2015 08:07

(ShareCast News) - Vodafone was in the black on Friday after saying it has made a good start to the year, with organic service revenue up 0.8% in the quarter ended 30 June, as the European businesses return to growth and customer demand for 4G and data takes off.Service revenue, i.e. proceeds the mobile phone company gets from customers' plans and traffic on its network, came in better than expected and ahead of the 0.1% increase in the fourth quarter.Vodafone said emerging markets have maintained their strong momentum, while it continues to hit its Project Spring build milestones and customers are beginning to value the improvement in service that is resulting. Contract churn in Europe is now falling and mobile average revenue per user trends are stabilising in a number of key markets, it said.The company's other key growth areas - unified communications and enterprise - are performing strongly, benefiting from the increased capabilities and footprint that its higher levels of investment are delivering."However, our markets are, as always, highly competitive and we therefore have to remain very focused on efficiency, cost control, and excellent value and service to customers, while continuing to deliver a good return for shareholders," said group chief executive Vittorio Colao.Vodafone said trading in the first quarter was consistent with management's expectations underlying the outlook statement for the 2016 financial year2. As a result, it confirmed its outlook for the 2016 financial year.Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "Vodafone has bucked the trend of a weak wider market with an update which confirms its ongoing improvement."He added: "Speculation within the sector around consolidation and, indeed, the company's own progress have led to a share price rise over the last year of 18%, as compared to a 2% dip for the wider FTSE100. With prospects for Vodafone looking increasingly promising, the market consensus of the shares as a buy is likely to remain intact."At 09:19, Vodafone shares were up 3.1% at 239.15p.