The firm said service revenues edged up 0.1 per cent in the final three months of its financial year, with the UK up 0.6 per cent having returned to growth in the previous quarter.
Underlying earnings for the 12 months to the end of March fell 6.9 per cent to £11.9 billion, mainly hit by revenue declines in Europe, although the figure was at the top end of the guidance range, and chief executive Vittorio Colao said there were “increasing signs of stabilisation in many of our European markets”.
He added: “In emerging markets, our good growth trend has continued, driven by rising data penetration and leading network quality and distribution.”
However, Vodafone’s shares fell 7.5p, or 3.2 per cent, to 226.6p as the group predicted earnings before interest, tax, depreciation and amortisation of between £11.5bn and £12bn for the current financial year.
“It would appear that the prospect of further network investment being required to offset squeezed consumers is weighing on expectations and taken the shares back from three-month highs,” said Mike van Dulken at Accendo Markets.
Analysts at Espirito Santo Investment Bank, which has a “sell” rating on the group’s shares, said: “Over the medium term we remain concerned about the threat of disruptive competition in a number of Vodafone’s markets, including the UK and Netherlands, and the potential for a negative surprise on spectrum renewal costs. These results did little to assuage these fears.”
In the UK, growing demand for superfast 4G mobile services and the benefits of Vodafone’s £19bn “project spring” investment plan contributed to the best half-yearly revenues performance since early 2012.
Colao said: “We have significant opportunities, with only 13 per cent of European mobile customers using 4G, and our market share in fixed services only a fraction of our share in mobile.
“In addition, businesses around the world are increasingly looking to put mobility at the centre of their own strategies. With the assets and skills we have today, further enhanced by the completion of Project Spring, we will be strongly positioned to provide ever improving services to customers and seize these opportunities.”
The group now has 20.2 million 4G customers in 18 markets, resulting in data volumes increasing 81 per cent year-on-year in the final quarter of the year. In the UK, there were three million 4G customers, up from 2.2 million in December.
Vodafone proposed a final dividend of 7.62p a share, to be paid on 5 August. That would lift the total payout for the year by 2 per cent to 11.22p.