Vodafone said Spanish customers trying to save their pennies had hit service revenues offsetting surging demand for 4G services in Europe between April and June.

Total service revenues rose 6.4 percent year-on-year to €11.9 billion as overall group revenues climbed 6.2 percent to €12.9 billion.

European revenues fell 7.9 percent as they continued to be hit by regulatory changes and struggling economies although there was quarter-on-quarter improvement.

Spain was the major weakness dropping 15.3 percent, compared to a 12.6 percent decline in the last quarter, hit by increased competition and growing demand for cheaper SIM-only deals. Spanish customers also bought more mid-tier handsets in integrated bundles.

However, German revenues improved declining 4.9 percent in the quarter from 5.8 percent last quarter helped by better network performance and less dropped call rates.

Italian revenues fell 16.1 percent, better than the 18.1 percent fall last quarter, helped by price rises and more business customers.

In the UK, service revenues fell 3.2 percent compared to 3.6 percent decline with Vodafone hailing a return to growth in its consumer mobile sector driven by 4G bundled with content packages.

Overall in Europe Vodafone said 4G now covers 52 per cent of the population, with 6.7 million customers, up from 46 percent in the last quarter.

Outside of Europe service revenues at its South African Vodacom unit were flat compared to 5.1 percent growth last quarter as a 50 percent MTR cut hit the fees it could charge.

India revenues surged 10.3 percent as data revenue growth accelerated helped by more 3G take-up.

Overall, Vodafone Red added 2.3 million new customers. Enterprise revenues dropped 2.9 percent.

Meanwhile, the operator said its £19 billion Project Spring initiative to improve network performance and capability had “taken off quickly”.

It added its outlook for the year was unchanged.

Chief executive Vittorio Colao commented: “This year has started in line with expectations. Through our commercial actions and investment our programme is beginning to stabilise quarter on quarter in several of our European markets with customer appetite for 4G services clearly growing.

“We are increasingly well positioned to deliver high speed mobile and fixed data services to consumers and businesses alike.”

Guy Peddy, analyst at Macquarie Research said Vodafone may have hit the “low point of its European trends”.

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