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Vodafone on Tuesday predicted some smaller mobile operators would be squeezed out of European markets and said the group could be interested in buying such businesses.

Arun Sarin, Vodafone’s chief executive, predicted consolidation in the region because of the ferocity of competition, and said the group would “look at these assets”.

Any deals would have to pass Vodafone’s financial criteria but Mr Sarin said the group would be interested in Hutchison Whampoa’s mobile businesses in Italy and the UK if they were put up for sale.

He also said Vodafone could expand its presence in emerging markets, and raised the prospect of the group increasing its stake in Bharti, India’s biggest mobile operator.

Mr Sarin’s upbeat remarks about potential acquisition activity came as Vodafone reported a pre-tax loss of £3.3bn ($6.3bn) for the first six months of 2006-07, compared with a £3.9bn profit for the same period last year.

The loss was partly the result of an £8.1bn impairment charge on the goodwill of its German and Italian businesses.

Vodafone’s earnings before interest, tax, depreciation and amortisation were £6.2bn for the six months to September 30, up 3 per cent, while revenue was £15.6bn, up 4 per cent on an organic basis. Vodafone’s shares closed down 0.5p on Tuesday at 135.5p.

Vodafone reiterated its May guidance of slowing revenue growth and a declining profit margin in 2006-07 compared with 2005-06.

In the first half of 2006-07, strong revenue growth in Vodafone’s businesses in emerging markets helped offset falling sales in some of its core European operations.

Businesses in eastern Europe, the Middle East, Africa, Asia and the US reported revenue of £3.1bn for 2006-07, up 21 per cent on an organic basis.

Mr Sarin predicted that Europe would see some mobile operators “closing their shops and going home” because, against a backdrop of price cutting, only big players such as Vodafone could realise significant cost savings through economies of scale.

Mr Sarin also said Vodafone could pursue “selective acquisitions” in Africa, Asia and eastern Europe, but stressed no businesses had been “targeted”.

Vodafone has a 10 per cent stake in Bharti which Mr Sarin said “over the next several years” the group could find ways of increasing. He added that Vodafone was keen to maximise its participation in China, where it has a 3.27 per cent stake in China Mobile.

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