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By Paul Sandle
LONDON (Reuters) -European mobile group Vodafone reported another deterioration in Germany, its biggest market, in its third quarter, a weak point amid otherwise stronger trading in Britain, Turkey and Africa.
Shares in Vodafone opened down over 6%, more than wiping out gains made in the last 12 months.
Service revenue in Germany fell 6.4% in the quarter, worse than the 6.2% drop in the second quarter, which it said was due to the ongoing impact of a change in pay-TV laws and increased competition in mobile.
Chief Executive Margherita Della Valle said action she had taken to turn around the business in Germany, including leadership changes, would take time to boost profit.
"We are continuing to invest in the turnaround of our German business and we are starting to see improving customer trends, although conditions have become more challenging in the mobile market," she said on Tuesday.
Vodafone has been hit by the end of pay-TV bulk contracts in apartment blocks in Germany, which came into full effect last year. It has lost just over half of the customers affected, leaving it with 4.1 million households by end-December.
Della Valle said losses were fully in line with expectations, but the financial hit would take a few quarters to wash through.
"On top of that the market has been a bit more promotional than usual around Christmas, Black Friday," she told reporters.
Vodafone said its core earnings in Germany would be lower in the second half than the first, which Della Valle said was down to one-offs and the more promotional environment.
For the group as a whole, however, it said it continued to expect full-year core earnings to come in around 11 billion euros and adjusted free cash flow of at least 2.4 billion euros.
The group's total service revenue accelerated to 5.2% in the three months to the end of December, driven by a step-up in the UK and strong performances in Turkey and Africa.
In Britain, where Vodafone's merger with rival Three will complete in the coming months, service revenue grew by 7.6%, helped by the addition of 37,000 mobile contract customers and 72,000 broadband customers.
(Reporting by Paul Sandle; editing by Sarah Young and Sharon Singleton)