Vodafone Group may raise dividend by 20%

VODAFONE Group, in which many former eircom investors hold shares, may raise its dividend by 20%, easing investor concern that chief executive Arun Sarin’s expansion strategy may hurt shareholder returns.

Almost a year in the job, Mr Sarin should generate cash from Vodafone’s 130 million mobile-phone users in 26 countries, return more of it to shareholders and keep a lid on takeovers, said investors such as Peter Braendle at Swissca Portfolio Management in Zurich.

Many shareholders opposed the bid for AT&T Wireless, saying it would erode earnings. Mr Sarin, 49, has said he wants to buy Vivendi Universal SA’s stake in French unit SFR.

“I’d like to think they had learned their lesson and will act more prudently but there always remains a fear that they’ll overpay,” said Mr Braendle, who manages $1 billion including Vodafone stock.

“I’d like more progress on the dividend.” Vodafone, the world’s biggest mobile phone company, will probably raise the final dividend to 1.08 pence a share, according to the median estimate of five analysts surveyed by Bloomberg.

The net loss in the six months ended March 31 probably narrowed to £4.78 billion pounds from £5.48 billion a year earlier, according to a survey of six analysts, as the Newbury, England-based company won clients from Egypt to New Zealand.

Vodafone reports earnings at 7am in London today.

The company has reported cumulative net losses of £40.1 billion this decade, as it writes down purchases including the €154 billion takeover of Germany’s Mannesmann AG in 2000.

Second-half sales probably rose to €25 billion from €23 billion, the survey showed. With a 45% stake in US market leader Verizon Wireless, Vodafone was lured to AT&T Wireless by the chance of winning control of a US operator.

When Cingular Wireless LLC, owned by SBC Communications Inc and BellSouth Corp, agreed to buy AT&T Wireless, Vodafone retrenched and pledged commitment to New York-based Verizon.

Mr Sarin has since November expressed interest in the rest of Vivendi’s SFR.

Vivendi has said it doesn’t want to sell, and this month chief executive Jean-Rene Fourtou said he would even consider increasing ownership.