‘Locked in’ Vodafone investors get chance to cut their losses

Fifteen years after they were given shares they never wanted, Ireland's army of Vodafone shareholders are being offered the chance to get rid of them at little or no cost.

Almost 335,000 Irish people own Vodafone shares, a legacy of the then Fianna Fáil/Progressive Democrat government’s great experiment in shareholder democracy under minister for communications Mary O’Rourke. All of them were among the almost 600,000 people who bought into the flotation of Telecom Éireann, as the company now called Eir was known in 1999.

Very few made any money on the deal as the value of the Eircom shares dropped just days after it joined the stock market.

The group sold off its most valued asset, Eircell, in May 2001 in a move that gave Vodafone its first entry into the Irish market. But shareholders were not given the option to cash out. Instead they received just under one Vodafone share for every two Telecom shares they held.

Ever since then, they have been waiting for shares in Vodafone to get to a level where they could at least break even in selling them. It has not happened.

Confusing matters

To confuse matters further, they were subsequently given shares in another telecommunications company – US company

Verizon

– when Vodafone sold its US business.

Now Vodafone is offering a special low-cost share-dealing service to allow small “locked in” investors cash out. For investors with fewer than 50 Vodafone shares, there will be no charge at all.

Parallel to the Vodafone offer, many of the same shareholders are weighing up a separate low-cost offer to sell their Verizon share or shares.

Revenue, which steps in in cases such as this where company shares are divided, consolidated or sold for other shares, has said that Irish investors would need Vodafone’s share price to rise to the sterling equivalent of €4.58 before they make any money. As it stands, the shares are trading at around 225p sterling, or €2.96.

The absence of commission on selling the shares will help, but investors are still around €1.62 a share poorer on this latest deal. Hardly a blue-chip investment.