The new boss of Vodafone slashed the mobile operator's dividend on Tuesday, reversing a pledge to maintain the payout in order to secure enough firepower to build 5G networks and complete its acquisition of Liberty Global assets.
Nick Read, the former CFO who has been in the top job since October, said the decision to cut one of the biggest payouts in Britain had not been taken lightly, but showed the need to pay down debt and invest in the world's second largest mobile player.
The company cut the full-year dividend to 9 eurocents a share from 15.07 eurocents in its financial 2018 year and below the 14.55 eurocents that had been expected.
Full-year results to the end of March showed the group came under intense competitive pressure in Spain and Italy, while impairments recorded earlier in the year pushed the group into a loss of 7.6 billion euros ($8.5 billion).
"These challenges weighed on our service revenue growth during the year, and together with high spectrum auction costs have reduced our financial headroom," Mr Read said.
"The board has made the decision to rebase the dividend, helping us to reduce debt."
Vodafone shares opened 2 per cent lower in London before swiftly erasing most of those losses.
The stock has fallen 37 per cent in the last 12 months as investors fret about the cost of acquiring Liberty Global's cable assets in Germany and some other eastern European markets, the outlay on new spectrum for 5G services and tougher conditions in some European markets.
Organic service revenue, a key industry measurement, fell 0.6 per cent in the fourth quarter, which Mr Read said should be the low point.
Vodafone reported group revenue of 43.7 billion euros for the year to end-March, down 6.2 per cent, with an operating loss of 951 million euros.
Adjusted core earnings rose 3.1 per cent on an organic basis, in line with Vodafone's guidance and analyst expectations.
For the 2020 financial year, Vodafone said it expected adjusted core earnings of 13.8 billion - 14.2 billion euros, implying low single digit organic growth, and free cash flow pre-spectrum of at least 5.4 billion euros.
CEO Read had said at the half year the dividend was affordable at the current levels and once the company brings debt back towards the lower end of its range, the board would consider returning to dividend-per-share growth.
He said on Tuesday the new policy ensures the dividend will be secure going forward.