Vodafone will reinvest a $3.2-billion U.S. dividend from its healthy U.S. arm to counter weakness in southern Europe that contributed to the largest ever quarterly fall in the group's main revenue measure.
The British firm is trying to decide whether to sell Verizon Wireless, its profitable U.S. unit in what could be the world's third largest deal to support its struggling core operations.
Majority owner Verizon Communications wants to buy Vodafone's 45% stake but Chief Executive Vittorio Colao once again refused to discuss the possibility, saying that he had nothing new to add.
The contribution from Verizon and cost cuts elsewhere helped Vodafone, the world's second largest mobile operator, to offset the increasing economic and regulatory pressures in Europe, to post profits slightly ahead of forecasts.
It was also affected by the timing of a leap year last year.
But Vodafone posted a 4.2% quarterly fall in organic service revenue, in line with forecasts, but worse than the 2.6% it recorded in the third quarter and the largest quarterly drop since the company started using the measurement in 2003.
The steepest falls came from 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-pound impairment charge on its business in Italy, taking the total writedowns for Spain and Italy for the year to 7.7 billion pounds.
Vodafone is the second largest mobile operator in both those markets but it has lost share to cheaper rivals, as cash-strapped customers switched to low-cost operators or ditched their phones altogether.
In response it is trying to broaden its appeal by offering new services such as superfast broadband and pay-TV to better compete with rivals.
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 U.S.), while core earnings fell 3.1%.
Full-year margins on core earnings were down 0.5 percentage points on an organic basis to 29.9%, from 33.1% just three years ago.
Margins at the U.S. business were at 50%, reflecting the market-leading position in the U.S. where it is adding customers at a rapid rate.
