(Telecompaper) Vodafone Group reported revenues for its fiscal third quarter to December down 2.0 percent from a year earlier to GBP 11.39 billion, hurt by continued weakness in European markets. Service revenue fell 2.2 percent to GBP 10.37 billion and on an organic basis was down 2.6 percent. Among its main markets, organic service revenues fell 0.2 percent in Germany, 5.2 percent in the UK, 13.8 percent in Italy and 11.3 percent in Spain. CEO Vittorio Colao said the company continues to work on cost control to offset the "very difficult" market conditions in Europe. As part of its growth initiatives, Vodafone launched the new Vodafone Red pricing strategy in five markets and said early take-up has been positive with over 2 million subscribers. It's also accelerating the integration Cable & Wireless Worldwide to strengthen its enterprise business. Enterprise revenues were down 2.5 percent in the latest quarter, while data revenues continued to grow, up 12.8 percent to GBP 1.7 billion. Data now accounts for 16.2 percent of group service revenue, and in Europe, over a third of customers are now using smartphones. Vodafone's capex reached GBP 1.5 billion in the quarter, little changed from a year earlier, while free cash flow fell 18 percent to GBP 1.2 billion. The company maintained its full-year outlook for free cash flow at the low end of the GBP 5.3-5.8 billion range, while adjusted operating profit should come in the upper half of the forecast range of GBP 11.1-11.9 billion. Despite the weaker revenue performance in Q3, Vodafone said it still expects an improving trend in the group EBITDA margin this year.