The prospect of a record special dividend for a British company emerged after Arun Sarin indicated that the successful sale of Vodafone’s Japanese subsidiary would prompt it to consider the best way of returning cash to shareholders.
Mr Sarin is said to be facing investor unrest after a series of disappointing updates culminated last week with a warning that revenues growth may slow.
Vodafone has around 400,000 Irish shareholders. They became investors after Eircom sold its mobile arm to the company in 2001.
Vodafone Shares slumped to a three-year low but recovered 8% on Friday as investors cheered confirmation that Vodafone was in talks about cutting its exposure to the competitive Japanese market.
Analysts believe a sale of a controlling stake to Softbank could net between £6bn-£8bn for Vodafone.
Mr Sarin told the Sunday Telegraph that he hoped an agreement could be reached within three to four weeks - raising hopes in the City for a £5bn special dividend at the end of the company’s financial year in May.
He said: “Just look at our track record. It is to return money to shareholders. We are returning £6.5bn through a share buy-back this year and more through dividends.
“When you bring Japan into the picture we will have to sit down and think about what is the best way - the most efficient way - of returning this money to shareholders.”
The report said Vodafone was likely to opt for a special dividend payment, rather than buying back shares from investors. While dividends are liable to taxation in Ireland and Britain, a third of Vodafone’s investors are in the US where tax on dividends has been cut.
A payment of £5bn would better the £4.2bn offered by Hilton Group following the disposal of its hotels to its American sister company.
A spokesman for Vodafone said yesterday: “If and when a deal is announced, we will clarify at that time what we will do with the proceeds.”
Analysts believe the sale of the Japanese business will give Mr Sarin breathing space as he looks to complete his One Vodafone restructuring.