Vodafone’s surprise £1bn buyback

Source: Exec Digital UK

Date :23/07/2008 09:38:25

The mobile phone group has startled everybody with a decision to buy back £1 billion of its shares.

Vodafone has today, July 23, announced a surprise £1 billion share buyback programme, saying a big share price fall in the wake of a trading update made yesterday, July 22, left the stock undervalued.

The firm’s shares slumped almost 14 percent after Vodafone said its full-year revenue would be at the bottom of a previously stated forecast range. This dented hopes the world's biggest mobile phone group by revenue would be relatively resilient to an economic downturn.

“The board … has considered the market reaction ... and has decided to introduce a 1 billion-pound share repurchase programme,” Vodafone said in a statement.

“This action reflects the board's belief that the share price significantly undervalues Vodafone.”

Vodafone shares, which yesterday fell by more than 13 per cent, rose by 5p to 134p with the breaking of the news.

The buyback will need shareholder approval at its annual general meeting on July 29.