- Future dividend ‘rebased’ from 9 euro cents to 4.5 euro cents
- Writing has been on the wall for months
- Share price has spent more than a decade in decline
New broom management get one chance to sweep away previous aspirations and problems and reset market expectations. Chief executive Margherita Della Valle, appointed to the top Job at Vodafone (VOD) just over a year ago, has now laid out the script of her final act; rebasing the dividend.
The shareholder payout for full year 2024 (to 31 Mar) was left untouched at €0.09, but investors will get only half that in the current year, targeting a more sustainable dividend of €0.045 per share ‘with an ambition to grow it over time.’
PAYOUT THREAT FLAGGED IN OCTOBER
Regular Shares readers may recall a feature from October 2023 when we pointed out how at risk the previous dividend had become long before any cut was being pencilled in to forecasts by analysts.
Shares in Vodafone managed to nudge a couple of percentage points higher on the results, to 71.64p, but this is scant reward for a share price that has been in a dismal decline for more than a decade. The rebased forward yield now stands at 5.4%.
At least Della Valle accepts that ‘much more still needs to be done’, promising a step-up in investment in customer experience, improvements to the performance in Germany and further streamlining of operations following the sale of operations in Italy and Spain.
Vodafone has tried to sweeten the dividend rebasing pill with a €2 billion share buyback funded from the proceeds from the Spain sale, with the possibility of an extra €2 billion buyback once the Italy deal is completed, probably in the first half of 2025.
WATCHDOG STOPS THE THREE MERGER CLOCK
But for the time being, Vodafone seems likely to remain in a sort of suspended animation while its proposed merger with Three UK drags on. The deal, which would give the enlarged Vodafone roughly 25% revenue share in the UK, recently got UK government approval on security grounds but the regulatory clock was stopped by the UK’s Competition and Markets Authority after documents were apparently filed late.
In a statement on 10 May, the CMA said it decided to extend the inquiry period, which currently has a statutory deadline of 18 September 2024, because Three UK’s parent company CK Hutchison failed to provide certain documents and information by 9 May.
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