Interim Management Statement for the Quarter ended 30 June 2012

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Group service revenue increased 0.6%*; excluding mobile termination rate (‘MTR’) cuts growth was 2.3%*
Continued strong service revenue growth in emerging markets: Vodacom 5.7%*, India 16.2%* and Turkey 18.7%*
Mixed trends in Europe: service revenue growth strong in Germany at 4.2%*; UK -0.8%* due to increased competition and a weaker economy; conditions in Italy (-7.7%*) and Spain (-10.0%*) remain challenging
Verizon Wireless (‘VZW’) service revenue grew 8.2%* driven by data
Group data revenue grew 17.1%* reflecting an increase in Europe smartphone penetration to 28.7%
£0.9 billion of free cash flow after capital investment of £1.1 billion
Good progress in strengthening our business: proposed acquisitions of Cable & Wireless Worldwide and TelstraClear; network sharing agreements in five markets
Net debt reduced to £22.7 billion after receipt of final SoftBank proceeds (£1.5 billion) and £0.8 billion of share buybacks (£6.8 billion share buyback programmes almost complete)
Full year outlook confirmed

		Change year-on-year
	Quarter ended June 2012	Reported	Organic
	£m	%	%
Group revenue	10,767	-7.7	1
Group service revenue	9,975	-8.1	0.6
Europe	6,943	-8.7	-1.6
Africa, Middle East and Asia Pacific	3,033	-4	6.1
Capital expenditure	1,116	-7.5
Free cash flow	943	-24.9

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