Vodafone has reported a near 10% fall in European revenues as recession continues to bite, but the group predicted revenues will begin to recover as 4G brings more customers to its networks, and the impact of price cuts imposed by regulators begins to ease.

The superfast mobile internet service is now live in 13 British cities, with 370,000 customers signed up so far. In the UK, Vodafone added a net 191,000 contract customers in the December quarter, but revenues fell 5% due to competition and regulatory price cuts.

"The environment in Europe remains challenging and we have continued to experience intense macroeconomic, regulatory and competitive pressures in the quarter," said chief executive Vittorio Colao. "The shift to 4G is gaining momentum and we have seen improving mobile customer net addition trends. We are therefore optimistic that our revenue performance will begin to improve as regulatory headwinds ease and customer appetite for video and content services increases."

Vodafone now has 2 million 4G customers across 13 countries, and has committed £7bn of the £130bn from the sale of its American subsidiary Verizon Wireless to Project Spring. This will expand the speed and coverage of its mobile internet services across Europe and boost the number of retail outlets in Britain.

At group level, revenues fell nearly 5% to £9.856bn, a shade lower than City forecasts, and not enough to stop the shares rallying 2.5% to 221p.

Performance in Europe was twice as bad as in the September quarter, when revenues fell 5%. Germany, which is Vodafone's largest market in the region, fell 8%, a steeper decline than last quarter. Spain (-14%) and Italy (-17%) remained extremely weak.

Asia, the Middle East and Africa offset falls elsewhere, growing 5.5%, and mobile internet in India is booming, with subscribers up 38% in the quarter to nearly 46 million. However, the soaraway growth seen in Turkey over recent years has begun to subside, with 4% growth replacing the double-digit performances of previous quarters.