Vodafone (VOD.L), the telecoms group targeted by activist investor Cevian Capital, said it was working to improve shareholder returns by tackling weaker parts of its business, as it reported a rise in quarterly revenue.

Chief Executive Nick Read said Vodafone had delivered a “solid quarter”, with a 2.7% rise in third-quarter group service revenue, including consistent growth in its biggest market Germany.

Analysts, however, said investors were focused on consolidation opportunities in markets such as Italy and Spain, which have long been problematic for Vodafone.

Chief Executive Nick Read, who has called for regulators to allow more consolidation, said: “We are also committed to creating value for our shareholders through proactive portfolio actions and continuing to improve returns at pace.”

The group is focused on strengthening commercial momentum in Germany, he said, and accelerating its transformation in Spain, where revenue continued to decline.

Vodafone lost 53,000 contract mobile customers and 50,000 broadband customers in Spain, while it recorded its eighth consecutive quarter of decline in Italy.

Shares in Vodafone, which are trading at the same level as 12 months ago, were 2.8% higher in early deals.

Analysts at Citi said they believed the numbers should be satisfactory for the market.

“The focus is firmly on developments in terms of in-market consolidation in UK/Italy and Spain and other initiatives, including the de-consolidation of (towers business) Vantage,” they said.

Reuters reported earlier this month that Vodafone and Iliad were in talks to combine their businesses in Italy, where operators continue to battle price pressure.

Vodafone said in November it expected to report adjusted core earnings of 15.2 billion to 15.4 billion euros and adjusted free cash flow of at least 5.3 billion euros.

Analysts expect adjusted core earnings of 15.26 billion euros and adjusted free cash flow of 5.34 billion euros, according to a company-compiled consensus.