Small Vodafone investors snub company offer to buy back shares

Just over one in four small Irish shareholders in Vodafone have availed of an offer by the company to sell their shares for free.

Vodafone, and its share registrar, Computershare, launched a special offer in February to sell shares commission free for anyone holding 50 or fewer shares. Investors with between 51 and 1,000 shares were offered a reduced commission on the transaction.

However, in the 10 weeks since it was introduced just over 26 per cent of small Irish shareholders have replied to the offer.

Of the 103,296 Irish shareholders with fewer than 50 shares – and an average of just 27 shares each – more than 76,000 have not replied. Just 60,831 of the 231,046 Irish investors with between 51 and 1,000 shares – whose average holding is 236 shares – have responded in the 10 weeks to date.

Many of these small shareholders originally invested in Telecom Éireann when it first floated, back in 1999. That investment has since seen them invest in both Vodafone and Verizon, and receive some cash back along the way, notably when the Sir Anthony O'Reilly-led Valentia consortium took the company private after selling off its mobile arm. Mostly, the successive transactions have crystallised a loss for the Irish investors.

The Irish Revenue has determined that investors would now need to get a price of €4.58 a share to make a profit on their Vodafone shares.

Registrar clean-up

The shares currently trade at just under £2.20 (about €2.80) in London, so anyone cashing out at this stage will be nursing a loss on the investment.

But with little sign of the shares breaking even and money now locked in for 16 years, it is understood some investors simply want to close the book on the Eircom investment.

For Vodafone, the exercise gives them a chance to clean up the share registrar featuring 401,000 small shareholders – more than 80 per cent of them in Ireland.

Just three weeks remain before the May 24th deadline – with shareholders looking to avail of the offer being advised to have their postal instructions sent in time to reach Computershare in Dublin by May 23rd. Shareholders who have registered their email addresses with Vodafone were sent a reminder of the deadline by email last Friday.