Vodafone has made the biggest annual loss by a European company after overvaluing its assets.

The company reported a loss of £14.9bn for its latest financial year, which included a single write-off of more than £23.5bn, largely due to the overvaluation of Mannesmann, a German company acquired in 2000.

Excluding the write-off, Vodafone made an £8.8bn profit and won 21 million new customers.

The UK-based group also announced a five-pronged strategy, including plans to outsource IT functions, which the company expects to reduce spending by up to 30 per cent in three to five years.

In a further effort to reduce costs Vodafone will cut 400 head office jobs in marketing, technology and back-office roles.

Vodafone has also announced that it will return £3bn to investors in addition to the £6bn it had pledged following the sale of its Japanese arm in March.

Robin Hearn, principal analyst at Ovum, believes Vodafone’s losses reflect a wider trend of low growth in service revenue across Europe. ‘There are rumours Vodafone will outsource its whole IT function to manage its cost base,’ he says.