Vodafone growth dips

Vodafone posted a sharp drop off in organic growth in the first quarter, dragged down by weak trading in Italy and Spain and a worse performance in Britain.

The British firm had outperformed its peers in the last year but the tough conditions across Europe forced the group to cut its medium-term outlook and write down the value of its assets by £4bn in May, as customers sought to save money by making fewer calls.

On Friday, Vodafone posted first quarter group service revenue of £9.98bn, reflecting organic growth year-on-year of 0.6 per cent, which was below the Reuters-compiled consensus of 0.9 per cent.

The 0.6 per cent compared to the surprisingly strong 2.3 per cent growth recorded in the fourth quarter, which benefited from a leap 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," chief executive Vittorio Colao said.

The group has benefited in the last year from strength in its emerging markets, Germany, Britain and Turkey which offset a slump in spending in Spain, Italy, Portugal and Greece, allowing the group to pay a record dividend.