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Vodafone Group Plc returned to sales growth in the second quarter as its toughest European market of Spain showed signs of improvement, in a boost for Chief Executive Officer Nick Read. Its shares rose as much as 3.2%
Organic service revenue grew 0.7%, above the 0.2% forecast by analysts. It follows two quarters of declines. Vodafone also upgraded its full-year earnings guidance.
Read needs some decent sales growth to generate cash for network investments and service debts built up with Vodafone’s purchase of Liberty Global Plc assets.South Africa, Italy and Spain all improved as Vodafone faced tough competition from former phone monopolies and no-frills challengers. The company said it had the best ever quarter for new customers in the U.K.Read said he expects to build upon the revenue growth in the second half of the year in both Europe and Africa.The company toned down its guidance on full-year free cashflow, while boosting its forecast for earnings after the Liberty Global deal.
Vodafone shares were up 2.5% as of 8:30 a.m. in London. The stock has risen 14% in the past year, outpacing a 5% rise in the Stoxx 600 Telecommunications Index, as investors welcomed Read’s plans to collaborate more with rivals on infrastructure to cut costs.NOTE: Vodafone CEO’s Wild First Year Leaves Stock Where It StartedOn Monday, 17 analysts surveyed by Bloomberg rated the stock a buy, six hold and two sell.
The company made a loss in its Indian business after a court ordered it to pay a spectrum fee. It now sees group free cash flow of “around” 5.4 billion euros versus previous guidance of “at least” 5.4 billion. Vodafone sees adjusted earnings before interest, tax, depreciation and amortization of 14.8 billion euros to 15 billion euros, up from its previous guidance of 13.8 billion to 14.2 billion.Company statementNOTE: BT Drops as Liberty Global Switches to Vodafone for Mobile
(Updates with share price rise. A previous version of this story was corrected to fix the revenue growth figure.)
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