Boost for Vodafone shareholders

Thousands of Irish shareholders received a boost yesterday as Vodafone shares hit their highest value in 10 years.

An announcement that the company is in talks to sell its stake in US network Verizon Wireless pushed the shares up as much as 9.6% at one point to their highest price since 2002, adding over €9.8bn to the market value of the world’s second-largest wireless company.

Thousands of Irish people who held onto their Eircom shares have a stake in Vodafone. In 2001, Eircom sold its mobile arm Eircell mobile for €4.2bn to Vodafone, and around half a million Eircom shareholders received shares in the deal.

The sale of its 45% stake in Verizon would end a partnership of over a decade that has paid billions in dividends to Vodafone while constraining Verizon from full ownership of the most profitable US mobile-phone company.

It is thought that Verizon Communications wants to pay around $100bn (€75bn) for the stake, although reports have said that Vodafone is pressing for as much as $130bn.

Vodafone investors and analysts expect the company to return a lot of the proceeds of a deal to shareholders, rather than embarking on more acquisitions or paying down borrowing.

“We would expect them to distribute a very large proportion of the proceeds to shareholders,” analyst Tom Gidley-Kitchin said.

Vodafone confirmed it was in discussion over the sale of the Verizon network, but said it is not yet completed, and there’s “no certainty an agreement will be reached.” Bob Varettoni, a spokesman for Verizon, declined to comment.

An announcement could come as early as Monday, sources said. As part of the deal, Verizon will probably sell back to Vodafone its 23% stake in Vodafone Italia, which could be worth about €4bn.

Verizon and Vodafone have for years tried to resolve their relationship. In March, it was reported the companies had discussed options ranging from a buyout of the venture by Verizon to a full merger. Verizon, which owns 55% of Verizon Wireless, has control over whether and when the unit pays its owners dividends.

Vodafone has lost about half of its market value since 2000. The shares yesterday ended up 15.45p to 204.75p on London’s FTSE 100.

— Additional reporting from Bloomberg