Southern Europe weakness checks Vodafone A strong performance from Vodafone's US business failed to offset weak demand in southern European, forcing the mobile operator to cut its growth target. The group attributed a £4bn impairment charge in its annual results to lower cash flows from the struggling economies of Italy, Spain, Portugal and Greece. The drop in spending by cash-strapped consumers in southern Europe and tougher government regulation prompted the company to cut its medium-term revenue growth target by 1 percentage point to a range of 0-3 per cent. "In places like Spain, Italy and Greece, the economic challenges will last for a while," said Vittorio Colao, Vodafone chief executive. We are delivering robust numbers given the circumstances. It is not the results that are disappointing, it is the economies in some of our markets. The £4bn writedown was lower than the £6.8bn impairment a year ago, but highlighted the mobile operator's continuing weakness in southern Europe, in contrast to the more stable markets of Germany, the UK and the Netherlands. Service revenues in Europe fell 1.1 per cent compared with the previous year, weighed down by regulated cuts to wholesale charges paid to rival providers for connecting calls, known as mobile termination rates. The story was different in the US where Verizon Wireless - the mobile operator 45 per cent owned by Vodafone - reported service revenues up 7.3 per cent year on year, contributing £4.9bn of profit to the British group. Annual sales from data rose 22.2 per cent, driven by the ever-growing popularity of smartphones, and now bring in almost 15 per cent of the group's total service revenues. Some 45 per cent of Vodafone's contract customers in Europe use a smartphone, up 11.5 percentage points from a year ago. In the 12 months to March 31, Vodafone reported flat pre-tax profit of £9.5bn from revenues up from £45.8bn to £46.4bn. Diluted earnings per share fell from 15.11p to 13.65p, and a final dividend of 6.47p was proposed, up from 6.05p, bringing the total payout to shareholders for the year - including a 4p special dividend - to 13.52p, a rise of 51.9 per cent from the previous year. Mr Colao refused to comment on Vodafone's £1.04bn bid for Cable & Wireless Worldwide, which has been called into doubt due to shareholder resistance to the deal. City pessimism, which has been highlighted by the shares trading at a discount to the offer price, was heightened on Monday when C&WW reported worse than expected figures. Mr Colao also took a swipe at the Indian authorities for pursuing Vodafone for $2.6bn in capital gains tax following its acquisition of a controlling stake in Hutchison Essar, an Indian mobile business, in 2007. "We will take all possible steps to safeguard our shareholder interests," he said. Vodafone shares rose 1.8 per cent to 167.95p.