Should I opt in or out of Vodafone share account?

Q&A Dominic Coyle


I’m assuming I threw out my share certificate with all the other Vodafone documentation that had built up over years when my mother informed me it was clogging up her house. I know nothing about shares. I did all that was required with the blue and yellow forms.

In Q3 of the Form of Election, the default option is to “Opt in to the Vodafone Share Account”.

Should I opt out of this so that I will receive a share certificate, especially if I decide that at a later date I wish to sell my pitiful amount of Vodafone shares? Or can we sell our shares via the default option once this whole transaction is completed?

Mr M.F., Dublin

I am conscious that many readers will at this stage be heartily fed up with the con- centration on the upcoming Vodafone return of value. However, more than 380,000 Irish people still hold shares in the company.

Most of them are small shareholders with little experience of such investments and the decisions they make in the next week have financial implications for them.

The good news for those without Vodafone shares is that decision day is February 20th.

In relation to this query, I think you might really have answered your own question. In relation to section 3, there is nothing to stop you selling your Vodafone shares regardless of the option you choose. The only real difference is that, under the default option, you will not have a paper share certificate.

As someone who admits they have already lost one, that might not be a bad thing.

If you do opt out under section 3, the company will send you out a paper share certificate for your Vodafone shares after the deal is complete.

If you lose it, you will not be able to trade the shares without expensively ordering a new one. With Computershare minding your stock, that won’t be an issue.

It is also worth noting that it can be more expensive to trade your shares using a paper share certificate rather than having your stock held electronically.

Brokers will argue that there is more administration involved in paper transactions, especially as they become less the norm.

Irish people seems to have a particular attachment to paper share certificates but they are rapidly becoming the exception rather than the rule.

US listed stocks don’t issue them – which means you won’t get a share certificate for your Verizon stock, if you choose to hold on to them.

Even the Irish Stock Exchange has been looking at moving to electronic holdings only – mind you, typically Irish, it has been looking at the issue for close to a decade now.

No sign of
a windfall
on shares

I’m one of the many small shareholders still hanging on to the remnants of a modest investment made at the time of the Eircom flotation.

I was initially delighted at the prospect of a “windfall” from Vodafone to counter the various losses incurred by this shareholding in its various guises over the years.

However, having studied the Vodafone info pack, including the impending share consolidation, I fail to see how there will any financial benefit in the return-of-value which is currently in process.

I’m hoping you can find a major flaw in my analysis: if not, I guess we’ve just been shafted again.

Mr J.D., Dublin

For reasons of space, I have not included the calculations you had in your email but, essentially, you are correct. This “windfall” is, according to Revenue less than the “base value” of the US holding that is being sold.

What Revenue did was assess what portion of the “adjusted” purchase share price of your Vodafone shares was accounted for by the US deal.

When I say adjusted, Revenue calculates what you “paid” for the Vodafone shares by adjusting for the Eircell deal and take private of the rest of the business by Tony O’Reilly’s Valentia consortium.

It has allowed for the 22 cent return of value a few years ago in the seven-for-eight share consolidation exercise undertaken by Vodafone and the impact of that consolidation.

Its assessment that the estimated return this time of €1.25 (part in cash, part in Verizon stock) was less than the €2.178 per share adjusted value of the US holding is the primary reason that there is no tax for those people choosing the “capital” option.

Revenue suggests the base cost of your Vodafone shares at €4.53.

As you note, a payment of €1.25 and a share price of about €2.70 (and as of yesterday it was close to €2.65) means a total value of €3.95 – well short of the €4.53.

And that is before the next share consolidation which is the final part of the Verizon deal puzzle.

It is not yet certain how this will proceed but Vodafone is guiding that you might receive one new Vodafone share for every two you now hold.

The point is that they want to hold the share price stable near the current value. Naturally, the market is likely to price the stock down by at least the €1.25 a share that is being given back to shareholders.

So, is it going to exacerbate the notional loss for Irish Vodafone shareholders? Yes. Notional? Well, until you actually sell your Vodafone shares, every loss or gain is “notional” or “on paper” rather than realised.

However the bottom line is that the prospect of making a profit on your Vodafone investment still looks as far away as ever barring some bid premium – ie the Vodafone share price jumping sharply should someone approach it with a takeover offer – which, for now in any case, is not in prospect.

I guess the only value is that you actually unlock some of the cash from your Vodafone investment rather than looking at it forlornly on the market. And, if you have gains from other investments, the Vodafone losses could cut or erase any capital gains tax liability due on those gains. Little comfort for most, I know.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email to This column is a reader service and is not intended to replace professional advice

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