Vodafone windfall: how much will I get, what do I do?
Vodafone’s ‘return to value strategy’ is the latest development for investors who originally bought into the Telecom Éireann flotation in 1999
Vodafone confirmed in November that it intended to increase the dividend per share by 8 per cent to 11 pence for 2014 (or 7.47 when the interim dividend is subtracted), subject to completion of this transaction.
So what do
I do now?
The first thing is to start making your way through the chunky documentation you will have received.
Vodafone is asking shareholders to vote on the transaction and you can do this by completing both the blue and yellow forms you should have received.
If you intend attending the meeting to be held in London on January 28th, you can use the slip on the front of the form to gain admission. Alternatively, you can submit your vote online, at vodafone.com/ courtmeeting.
Once you have finished the blue form, the next step is to complete the yellow form, which is looking for specific approval on certain elements of the deal. You can fill this out and post it back in the enclosed envelope, or again, you can complete this online by going to vodafone.com/generalmeeting.
To complete an online vote, you will need the control number, your unique PIN and shareholder reference number (SRN) which are printed on your forms of proxy.
Both these forms need to be returned by January 26th to be valid.
Once you have voted, you then need to decide how you want to receive the “return of value”.
The default option is the income option, or opting for C-shares, which means that you will be paid your “return” by way of a special dividend.
This will be liable to income tax at your marginal rate – so either 20 or 41 per cent – plus the universal social charge and PRSI, if applicable.
The alternative is the capital payment, or B-shares, which are liable to capital gains tax (CGT) at 33 per cent. Remember that the first €1,270 of taxable gains in a tax year are exempt from CGT, so if you pay tax at the higher rate you may wish to opt for the capital treatment. Neither option incurs a stamp duty charge.
Weber is recommending that his clients choose the capital option, as it means that you will incur a lower rate of tax.
If you opt for this, you can communicate this decision on the “form of election” you have been sent. Note that if any information on this form is wrong you can update it by logging into investorcentre.com or contacting Computershare on 01-696 8421.
You should also indicate on this form whether or not you want to receive a share certificate for the new Vodafone shares you will hold following the share consolidation.
If you wish to receive one, you must indicate this on the form of election. Otherwise shares will be held by Computershare, Vodafone’s registrar, in a corporate nominee account.
Finally, another point to consider is in which currency you wish to receive the cash – the options are euro, sterling or dollars.
Cash will be transferred to the bank account where your dividends are paid. Alternatively, you will receive the funds by cheque.
What will I do with the Verizon shares?
Once you have clarified how you wish to receive the cash bonus, the next decision you need to make is whether you want to hold on to your Verizon shares.
For Weber, if you’re simply holding Vodafone shares because you originally invested in Eircom, you probably shouldn’t hold on to the Verizon shares because of the administrative issues. Indeed, for investors with small holdings, dealing with issues such as US withholding tax on US dividends may not be worth it.