The British company was hit by the loss of roaming revenue as international travel was curtailed by the pandemic, resulting in a 0.4% drop in group service revenue in the second quarter.
Excluding roaming, service revenue grew 1.5%, the company said, helped by rises in its European contract customer base to 65 million and its broadband customers to 25.4 million, and speed-tiered unlimited data mobile plans in nine markets.
Chief Executive Nick Read said the results underlined “increased confidence” in the outlook and demonstrated progress in increasing customer loyalty, growing its fixed broadband base and delivering 5G efficiently through network sharing.
“Overall I’m pleased with pace and performance against our plan,” he told reporters on Monday.
Vodafone put numbers on its adjusted core earnings target for the year to end-March: 14.4 billion euros to 14.6 billion euros, compared to 14.5 billion euros for the previous year.
It had previously said they would be “flat to slightly down”. Analysts were forecasting 14.37 billion euros.
Shares rose as much as 4% to 125 pence, the highest level since late July.
Vodafone, which plans to list the spin-out of its towers business in Frankfurt early next year, also confirmed its full-year free cashflow guidance of at least 5 billion euros before spectrum and restructuring costs on Monday.
Read said more details on the IPO plan would be given to investors on Tuesday.
However, he said Vodafone wanted to put its stake in its CTIL joint venture with Telefonica into the spin-out.
“We have done a significant amount of work with Tef (Telefonica) and it is our intention ultimately to roll our stake in CTIL into Vantage Towers, ideally ahead of the IPO,” he said.
For the six months to the end of September, Vodafone reported adjusted earnings of 7.0 billion euros, down 1.9%, on a 2.3% drop in group revenue to 21.4 billion euros.