Intense competition in Spain and Italy took the shine off Vodafone's third-quarter revenues today, sending the British group's shares lower as its overall growth rate slowed.
Vodafone, the world's second largest mobile operator behind China Mobile, reported a 1.1% rise in organic service revenue for the three months ended December 31, down from the 1.7% recorded in the first half.
The results were also held back by weakness in the UK home market, where it has changed the way it accounts for the cost of handsets.
The slowdown in Italy came before the new challenger entrant, Iliad, arrives this year.
Germany, South Africa, Turkey and Egypt remained the bright spots for the company.
Vodafone said competition in Spain had eased since the quarter ended on December 31, and the group remains on track for its full-year target of growing adjusted core earnings by around 10%.
"It was a heavy promotional quarter, specifically Orange was pretty aggressive, and specifically targeting ourselves," Vodafone's finance director Nick Read told reporters of the Spanish market, where Vodafone competes with Orange and Telefonica.
"We clearly had to respond and there was a degree of churn that we experienced. All of those promotions are now out of the market place," he added.
Group service revenue in the quarter was €10.19 billion, broadly in line with consensus forecasts.