CHL China Mobile Limited

LONDON—Vodafone Group PLC's first-quarter sales grew as the British telecommunications giant on Friday reported a "stable" performance from its key European business.

The world's second-largest mobile carrier by subscribers after China Mobile Ltd. said revenue excluding handset sales, currency movements and mergers or acquisitions—a key gauge of performance in the telecom sector—rose 2.2% in the three months ended June 30. This figure, ahead of a consensus forecast of 1.9%, compares with a 2.5 % gain in the previous quarter of the last fiscal year and a 0.8% rise in the same period a year earlier.

In Europe—where Newbury, England-based Vodafone makes over half its earnings and two-thirds of its sales—growth on the same basis was 0.3%, compared with a 0.5% gain in the previous three months. In the same period a year earlier, Europe revenue dipped 1.5%.

In recent years, Vodafone has plowed tens of billions of dollars into its European operations to turn around yearslong anemic trading across the region. To jump-start its performance, it has bought up fixed-telecom assets to expand its reach, rolled out fiber-optic cable to spearhead a push into bundled media services and upgraded wireless network speed to tap consumers' rising consumption of internet data.

Vodafone's overall first-quarter revenue dipped 4.5% year-over-year to €13.4 billion ($14.8 billion).

The company didn't disclose profit figures and kept its outlook unchanged.

"We continued to make good progress during the first quarter. In Europe, our growth remains stable despite regulatory pressure on roaming revenue," said Vodafone's Chief Executive Vittorio Colao.

The company campaigned to support the U.K. remaining in the European Union and last month said it would consider moving its headquarters out of the country after Britain's vote to leave, although it said it is too early to make that call.

Vodafone, whose key European operations are in Spain, Italy and Germany , as well as the U.K, has stressed the benefits from the EU's single market trade rules and freedom of movement.

On Friday, the company switched to reporting in euros from sterling for the first time, signaling the company's increased European focus.

Write to Simon Zekaria at simon.zekaria@wsj.com

(END) Dow Jones Newswires

July 22, 2016 03:55 ET (07:55 GMT)

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