Vodafone posts biggest fall in service revenue

LONDON (Reuters) - Vodafone posted its largest ever quarterly fall in key organic service revenue on Tuesday, prompting it to keep hold of a 2.1 billion pound dividend from its U.S. arm rather than return it to shareholders.

The world's second largest mobile operator, at the center of intense speculation as to whether it will sell its U.S. arm in one of the world's largest deals, posted a 4.2 percent 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 percent 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 percent, while in Spain it was down 11.5 percent.

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

"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 percent to 44.4 billion pounds ($67.6 billion), while core earnings fell 3.1 percent to 13.3 billion pounds.

Its adjusted operating profit however was above guidance, up 9.3 percent to 12 billion pounds 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.

(Reporting by Kate Holton, editing by Paul Sandle)

Source: http://news.yahoo.com/vodafone-posts-biggest-fall-revenue-063457270.html

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