© Reuters. FILE PHOTO: A branded sign is displayed on a Vodafone store in London, Britain May 16, 2017. REUTERS/Neil Hall
LONDON (Reuters) -Vodafone said on Monday it was in “active discussions” about a deal in Italy, its worst performing major market, as it reported a sharp slowdown in growth in it biggest, Germany, in the third quarter.
The British group rejected a merger offer with rival Iliad in Italy last month in favour of pursuing a rival option.
Vodafone (NASDAQ:) reported third-quarter group service revenue growth of 4.7%, the same as the previous quarter, as a smaller decline in Spain helped offset the weaker contribution from Germany, where growth slowed from 1.1% to 0.3%.
Italy was the group’s toughest market, with service revenue declining by 1.3% in the third quarter against a 1.0% drop in the second.
Vodafone, which last year agreed to merge with Hutchison’s Three in Britain and sell its Spanish operation, is exploring a deal with Swisscom’s Italian unit Fastweb, according to sources.
The company said last month it was in talks with more than one party in Italy.
Chief Executive Margherita Della Valle said Vodafone had maintained “good” service revenue momentum in the quarter in Europe and Africa, supported by demand from business customers.
“Our announced transactions in the UK and Spain are progressing well, and we are in active discussions in Italy,” she said.
Vodafone reiterated its full-year guidance for adjusted core earnings to be broadly flat at around 13.3 billion euros, and adjusted free cash flow to come in around 3.3 billion euros.
Analysts, however, are sceptical. They expect on average core earnings of 13.07 billion euros and cash flow of 3.13 billion euros, according to a company-complied consensus.