Vodafone posts fall in service revenue

The world’s second largest mobile operator, at the centre of intense speculation as to whether it will sell its US arm in one of the world’s largest deals, posted a 4.2 per cent fall in organic service revenue, broadly in line with forecasts.

It is the largest quarterly drop since the company started using the measurement in 2003.

It also marked a further acceleration from the 2.6 per cent fall in the third quarter and reflected the tough economic conditions in its core European markets and the regulatory cuts which hit a peak in the three months to the end of March.

The steepest falls in revenue were in Southern Europe, where operators are cutting prices to win business from struggling consumers. In Italy service revenue fell 12.8 per cent, while in Spain it was down 11.5 per cent.

The group also took a £1.8bn impairment charge on its businesses in Spain and Italy, taking the total writedowns on those two countries for the year to £7.7bn.

“We have faced headwinds from a combination of continued tough economic conditions, particularly in Southern Europe, and an adverse European regulatory environment,” chief executive Vittorio Colao said.

“The board remains focused on balancing ongoing shareholder remuneration with the long-term investment needs of the business, and going forward aims at least to maintain the ordinary dividend per share at current levels.”

Overall the group posted its first fall in full-year sales since 2005, down 4.2 per cent to £44.4bn ($67.6bn), while core earnings fell 3.1 per cent to £13.3bn.

Its adjusted operating profit however was above guidance, up 9.3 per cent to £12bn due to the strong performance in the United States, where it owns 45 percent of Verizon Wireless.

The group did not make any mention of the speculation that it could sell its stake to joint venture partner Verizon Communications.