The Vodafone group posted its largest ever quarterly fall in key organic service revenue, prompting it to keep hold of a £2.1 billion sterling dividend from its US arm rather than return it to shareholders.
The world's second largest mobile operator is at the centre of intense speculation as to whether it will sell its US arm in one of the world's largest deals.
Today it posted a 4.2% fall in organic service revenue. 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% 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 biggest 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%, while in Spain it was down 11.5%.
The group also took a £1.8 billion impairment charge on its businesses in Spain and Italy, taking the total writedowns on those two countries for the year to £7.7 billion.
"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,'' he added.
Overall the group posted its first fall in full-year sales since 2005, down 4.2% to £44.4 billion, while core earnings fell 3.1% to £13.3 billion.
Its adjusted operating profit, however, was above guidance, up 9.3% to £12 billion due to the strong performance in the US, where it owns 45% 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.
Meanwhile, Vodafone Ireland said it added 43,000 new contract customers over the last year and its total customer base stood at 2.41 million by the end of March.
The company said it added 227,000 smartphone subscribers in the 12 months to March, a 29% increase. Over one million of its customers now use a smartphone.
Its average revenue per user for the year rose by 0.7% to 31.40 and it said it performed well despite the challenging operating environment.
It said that increased customer demand for data products and services was driven by its on-going investment in network performance. It also noted that its fixed line customer base increased by 3.8% year on year to reach 248,700 by the end of March.