Commenting on the news, Lee Wild, editor of Interactive Investor says: "The Vodafone story is all about growth and, while first-quarter results were hardly in knockout territory, a 2.2% increase in organic service revenue was better than expected". "Our focused investment strategy delivered a further improvement in our revenue market share in our leadership circles, based on regulatory disclosures for the prior quarter", it said.
However, overall reported revenue, which accounts for currency fluctuations and structural changes to the company's operations, was 3.3% lower than in the corresponding period 12 months ago to €11.5bn.
Back in March, Vodafone announced an agreement to combine its subsidiary Vodafone India (excluding its 42 percent stake in Indus Towers), with Idea Cellular. "We expect the transaction to complete in early August, following which Vodafone's ownership in Vodacom will increase from 65% to 70%", Vodafone said.
Reported European revenue dropped 4.8% to EUR8.30 billion, but Vodafone said it saw "good momentum" in the region, with robust growth in Italy and Spain, similar underlying trends year-on-year in Germany and recovery in the UK. The telco also nearly managed to hold on to its average revenue per user (ARPU) at Rs 141, compared with Rs 142 in the previous quarter.
"While these latest results show that Vodafone is operating a relatively stable business in many foreign markets, the impact of Brexit on its United Kingdom operations is already being felt", said Matthew Kendall, chief telecoms analyst at The Economist Intelligence Unit.
"Rising competition has seen India hit a significant speedbump, jolting Vodafone to the extent that it took a multi-billion euro write-down and split the Indian operation from the wider group", said George Salmon, equity analyst at Hargreaves Lansdown.
Service revenue declined by 13.9 percent, as a result of continued price competition from the new entrant and incumbents, Vodafone said.
While the company managed to retain high value customers in the June quarter, it conceded that the growth in its mobile customer base at 2.9 million was lower than 4.4 million in the previous quarter. "We ended the quarter with a closing customer base of 211.9 million".
"Overall, this performance gives us confidence in reiterating our outlook for the year", the CEO said.
Shares rose 1.31% to 226.60p in late afternoon trading.