The operator cited poor performance in its southern European markets as a the main reason for the drop, and it is now looking to make up for the decline through its £2.1 billion dividend from its US business.
The Financial Times reports the company is aiming to put the £2.1 billion dividend back into the business from Verizon, rather than offer shareholders a windfall.
Vodafone’s results show its biggest fall in service revenue in five years.
“We have faced headwinds from a combination of continued tough economic conditions, particularly in south Europe, and an adverse European regulatory environment,” said Vittorio Colao, chief executive at Vodafone.
Europe’s mobile industry has significantly suffered in recent years as both competition and regulatory pressure puts strain on the major operators in the region.
Vodafone further blamed cuts to mobile termination rates, wholesale charges to rural providers for connection and a continued decline in voice revenue as additional reasons for its poor performance.
“The effect of mobile termination rate cuts was more severe in the past quarter. The macroeconomic environment is what is hurting us most, especially in southern Europe,” said Andy Halford, chief financial officer at the company.
Poor conditions in Southern Europe, particularly in its businesses in Italy and Spain, led to services revenue declines of 12.8% and 11.5% respectively.
Colao declined to comment on rising speculation that Vodafone is set to sell its 45% stake in Verizon Wireless.
