Q3 service revenue growth flat quarteronquarter at 4.7
Recovery in Germany slows to 0.3 from 1.1 in Q2
Says in active discussions in Italy
Shares fall 1.2

LONDON, Feb 5 Reuters Vodafone said on Monday it was in active discussions about a deal in Italy, its worst performing major market, as it reported a slowdown in growth in its biggest, Germany, in the third quarter.

The British group rejected a merger offer from rival Iliad in Italy last month in favour of pursuing other options.

Sources have said that Vodafone, which last year agreed to merge with Hutchison39;s Three in Britain and sell its Spanish operation, is exploring a deal with Swisscom39;s Italian unit Fastweb.

Chief Executive Margherita Della Valle said the group was engaged in live discussions in Italy.

Our focus remains on delivering the best value creation for Vodafone, as we39;ve done so far in driving consolidation.

Vodafone reported thirdquarter service revenue growth of 4.7, the same as the previous quarter, as a smaller decline in Spain helped offset the weaker contribution from Germany, where growth slowed from 1.1 to 0.3.

Della Valle said the German slowdown reflected oneoff benefits in the previous quarter.

The underlying commercial performance is accelerating, she said. Broadband churn is now behind us and we have great offers in the market supported by superior fixed and mobile networks.

Italy was the toughest market, with service revenue declining by 1.3 in the third quarter….