Cantillon: Vodafone hits wrong key in ‘good news’ story

Last minute rush by Irish shareholders for forms allowing them to claim payout without liability for a tax bill leaves some out in the cold

Sat, Feb 15, 2014, 07:00

As an exercise in corporate communication, it was a fiasco.

Vodafone is giving shareholders $84 billion in cash and shares – almost two-thirds of the $130 billion it received for the sale of its 45 per cent stake in Verizon Wireless to its US partner Verizon. More than 380,000 Irish shareholders were among those due to receive the payout, valued at roughly €1.25 for each Vodafone share they own. As a story, it has good news printed all over it...

The British telecoms group was under no obligation to formally publicise a deadline for issuing replacement forms to shareholders who had either dumped the original information pack or moved address and failed to notify the share registrar. But, having done so in face of a series of queries from Irish Times readers, it got its lines crossed with Computershare, the company that manages their share register and was manning the shareholder helpline and reissuing the forms.

While Vodafone said the deadline was close of business yesterday (Friday), Computershare told their staff it had passed 24 hours earlier.

For most Vodafone shareholders globally, it wasn’t a huge issue. But for Irish investors – holding just 1 per cent of the company but still suffering significant losses on their investment, which dated back 15 years to the Telecom Éireann flotation – failure to complete the form would add insult to injury ... a tax bill of up to 52 per cent of the payout.

To avoid this, they needed to expressly choose to have the payment as a capital disbursement rather than the default position of it being a special dividend subject to tax.

Vodafone not unreasonably argues shareholders had almost two months to get things organised from the date the original documents were posted. And it points to extensive coverage – not least in this paper – of the issues for shareholders since then.

It might also, not unreasonably, consider that the January 26th deadline for voting on the Verizon deal might have awoken shareholders to the need to act.

For their part shareholders struggled to understand why you could vote online for the multibillion dollar Verizon but not apply online for a relatively small payout. They were also clearly surprised that Computershare would only send the forms out from its Bristol office, and not for its Dublin unit, adding further delay. yesterday’s deadline was already squeaky tight.

Many clearly had left it to the last minute. Now, some of them will pay the price.

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