Vodafone paid no UK corporation tax for a second year running last year as the world's second-largest mobile phone company benefited from tax breaks related to a multibillion-pound investment in spectrum licences and infrastructure.

With revenues of nearly £45bn last year, Vodafone reported underlying earnings of £13bn, and a global profit of more than £3bn. The UK business generated more than £5bn in revenues and £1.2bn in underlying earnings.

The company paid £2.6bn in tax to other nations last year, but its UK corporation tax bill was zero. According to the annual report, published on Friday, it did pay £24m in respect of tax recalculated for previous years.

UK levies are minimal at Vodafone because the company is allowed tax breaks on the cash it invests in buying spectrum and in network equipment, and on the £300m a year in interest its UK operating company still pays on money raised to buy spectrum at the 3G airwaves auction 13 years ago.

Vodafone's tax payments are notably lower than the cash it distributes in dividends. In the last year, shareholders benefited from a 13% rise in the stock price and £4.8bn in dividends. The company is cash rich thanks to money collected from Verizon Wireless, America's largest mobile network, in which Vodafone holds a 45% stake. Speculation that Vodafone would be tempted to offload the stake has helped boost demand for its shares.

In light of the economic crisis in Europe, which has taken its toll on Vodafone's revenues there, the pay of Vittorio Colao, chief executive, is to be frozen for a second year running, along with that of most of his top team.

"When considering what, if any, pay increases to award, the committee is always mindful of both wider conditions as well as what is happening elsewhere within Vodafone," Luc Vandevelde, remuneration committee chairman, wrote in the annual report.

The report revealed that Colao earned £11m last year. However, his total rewards including share options, cash bonus and pension, fell from nearly £16m in 2012. His base pay, which includes fees as well as salary, rose by £11,000 to £1.11m, and his private healthcare and car allowance rose £6,000 to £30,000. In addition he received £333,000 cash in lieu of pension.

Missed targets for the group's underlying earnings, cash generation and revenues meant Colao's share awards and cash bonus were lower than in 2012. He received £8.25m in shares and £1.313m in cash bonus.

A collapse in consumer confidence has made trading tough for Vodafone in the eurozone. In southern Europe, revenues fell by 11%, and operating profits by 28%. In the past year, Vodafone has slashed the book value of its Italian and Spanish businesses by a combined £7.7bn.