Investing.com -- Vodafone Group PLC (LON:VOD) reported a slowdown in revenue in the three months to December Friday, but repeated that it will generate enough cash to pay a heavy dividend bill for the full year.
Group revenue fell to 11.0 billion euros on a mixture of disposals, foreign exchange effects and a change in accounting standards. Earnings per share weren't disclosed.
The U.K. telecoms giant said the quarter had been in line with its expectations, and that it still expects its basic underlying earnings to rise by about 3% in the fiscal year ending in March. However, it continued to struggle in key European markets such as Italy and Spain, and a slowdown in its South African unit Vodacom (JO:VODJ) hit its non-European business.
"Overall, this performance underpins our confidence in our full year guidance," Chief Executive Nick Read said.
Vodafone's shares fell 0.8% in early trading in London to their lowest in over eight years.
The company repeated it expects to generate 5.4 billion euros ($6 billion) in free cash flow for the 2019 fiscal year, which will more than cover the dividend. Vodafone shares were yielding just under 8.9% at Thursday's close, reflecting fears that it isn't able to sustain its current payout ratio.
Vodafone’s shares in London had fallen 3.5% on Thursday after Vodacom reported a surprising drop in revenue in the quarter due to an unsuccessful promotion campaign. However, Vodafone said strong growth across the rest of its African business in the quarter offset that. Revenue from its non-European operations rose 4.9% in the period, down from 7.7% in the previous quarter.
It also reported a 2 percentage point drop in its churn rate among mobile customers, an improvement that Vodafone said wasn't yet reflected in its revenue numbers.
The company also reiterated Friday that it intends to raise further cash by selling at least some of its towers business in the medium term.