By Simon Zekaria 

LONDON-- Vodafone Group PLC reported on Thursday better-than-expected third-quarter revenue amid a recovery in Europe, its key market.

Revenue in the three months ended Dec. 31 rose 13.5% to GBP10.88 billion ($16.52 billion), beating market forecasts of GBP10.40 billion. Excluding acquisitions and disposals and on a constant currency basis, revenue rose 0.7%.

Group service revenue, a key metric based on telecom-services sales, fell 0.4% excluding acquisitions and disposals, and on a constant currency basis. That compares with a 4.8% decline in the same period last year.

On the same basis, revenue in Europe fell 2.7% in the quarter, compared with a 9.6% decline in the same period last year.

"In Europe, improved commercial execution in both mobile and fixed over the last few quarters, combined with strong data demand and a more stable pricing environment, is supporting the steady recovery in the top line," said Chief Executive Vittorio Colao.

The world's No. 2 mobile operator by number of subscribers after China Mobile Ltd. reiterated its fiscal-year guidance of adjusted operating profit of between GBP11.6 billion and GBP11.9 billion.

It didn't disclose earnings figures.

A squeeze on consumer spending in recession-hit European markets, particularly in the south, has hurt Vodafone's results in the past few years.

Vodafone shares closed Wednesday at 236.5 pence, valuing the company at GBP62.70 billion.

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

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