Vodafone reports better-than-expected 2.2 percent growth in firs quarter

LONDON (Reuters) - Vodafone, the world's second largest mobile operator, reported better-than-expected 2.2 percent revenue growth in its first quarter, reflecting a robust performance in Italy and Spain and an acceleration in demand in Turkey.

The company said the rise in organic service revenue, which was ahead of market forecasts of 1.4 to 1.9 percent, boosted its confidence in the outlook for the full year, when it expects to grow core earnings by 4-8 percent.

The British operator also expects cash flow to jump this year, enabling it to increase dividends, as it eases back on network investment, improves efficiency and tackles intense competition in India by merging with a rival.

Chief Executive Vittorio Colao said the group had made a good start to the year in Europe, helped by demand for data packages and broadband, and growth had accelerated in its African, Middle East and Asia Pacific markets.

Areas of weakness remained in Europe, however. Growth in Germany halved to 0.6 percent, from 1.2 percent in the previous quarter, and although its performance in its problematic British market improved, it was still down 2.7 percent.

"Overall, this performance gives us confidence in reiterating our outlook for the year," he said on Friday.