Irish shareholders in Vodafone look set for more disappointment following the group’s decision to withhold a special dividend, despite receiving a large payout from its US arm, Verizon Wireless.

Revenues at mobile operator Vodafone fell for the first time in seven years after a weak performance from its southern European arm and a writedown of its holdings in Spain and Italy impacted earnings.

Full-year group revenue dropped 4.2 per cent to £44.4 billion (€52.2 billion) as revenues at its southern European arm slumped 16.7 per cent to £9.6 billion in the year ended March 2013.

Earnings before interest, taxes and depreciation also fell 8.3 per cent to €13.3 billion after restructuring costs strained its balance sheet.

Vodafone’s operations in Italy and Spain were written down by £7.7 billion due to poor performance as part of the restructuring costs.

However shareholders were disappointed as the group announced it won’t pay a special dividend, despite receiving a £2.1 billion dividend from Verizon Wireless. The group will use the payout to invest in its 4G network.

Instead shareholders received a 7 per cent dividend increase, bringing the rise in dividends to 22 per cent over the past three years.

Irish-based institutional and personal shareholders hold 1.9 per cent of Vodafone’s shares. Many of them received shares in the group when Eircom sold its mobile group Eircell to Vodafone in 2000.

Most shareholders who gained shares through the Eircell-Vodafone share swap, in which each Eircom share became 0.9478 per cent of a Vodafone, have made a loss to date.

One-off
However Oriel Securities analyst John Karidis thinks the withholding of a special dividend is likely to be a one-off.

Mr Karidis said: “There have been three dividends in the last 18 months or so and it’s just that this latest dividend is being held back for potential investment in spectrum licences in the coming year.

“It doesn’t now mean that this is a policy for Vodafone and that all future Verizon Wireless dividends will be held rather than redistributed.”

There were no further developments about Verizon’s possible bid for the 45 per cent stake held by Vodafone in the US network.

“All we know from Vodafone is that Verizon has not approached Vodafone with any type of offer . . . Vodafone is under no pressure whatsoever to sell out of Verizon Wireless”, Mr Karidis added.

Vodafone shares rose in intraday trade and added 0.15p or 0.08 per cent to £1.98 at the close of the FTSE100.