Vodafone, the mobile operator, unveiled one of the biggest after-tax losses in UK corporate history yesterday of £16.2 billion sterling (€25.71 billion) after more than £20 billion of writedowns and other charges related to acquisitions.

The company took a hit of £6 billion on its fixed-line assets on top of goodwill amortisation charges of £13.5 billion.

But the group held back from writing down mobile phone acquisitions made near the height of the telecoms boom such as Eircell, insisting growth forecasts justified their current value on its books.

Shareholders, many of whom were expecting bigger writedowns, initially reacted positively, focusing on underlying operating performance.

But the euphoria was short-lived as investors digested the impact of a much higher tax charge for the current financial year reflecting increased earnings in Japan, where corporate tax rates are higher, and the loss of tax credits in Germany.

Free cashflow for the group, at under £2.4 billion for the year, was almost £900 million ahead of consensus expectations resulting mainly from lower capital expenditure costs.

Capital expenditure for the year was £4.1 billion, just under £1 billion lower than expectations after renegotiation of contracts with suppliers. Analysts were also heartened by a sharper-than-expected reduction in the group's net debt to £12 billion, taking debt levels £1.5 billion lower than expectations. But Vodafone resisted calls to return more cash to shareholders.

Sir Christopher Gent, chief executive, said he favoured holding on to cash, arguing there could be "good short-term opportunities to buy more companies we know and love".

But there was concern over the group's possible continued acquisition strategy. There was also scepticism over long-term growth prospects for data services as Vodafone put back its expectations for achieving 20 per cent of revenues from data services. It now only expects to reach this target by the end of 2004.

Turnover for the group rose 52 per cent to £22.85 billion. But stripping out recent acquisitions, underlying turnover rose 11 per cent.

Proportionate earnings before interest, tax, depreciation and amortisation increased by 44 per cent to £10.1 billion, making it likely that Sir Christopher will receive the second half of a bonus worth £10 million when it was first awarded last year.

Vodafone said any bonus would be examined by its remuneration committee.