Vodafone unveils £1bn share buyback

VODAFONE yesterday said it would buy back £1 billion of its own shares after the stock fell 14 per cent in the wake of a disappointing trading update.

The mobile phone giant said the move "reflects the board's belief that the share price significantly undervalues Vodafone".

Some £10 billion was wiped from the value of the company on Tuesday after it said revenues for the year to 31 March would be at the foot of its expected range of £39.8-40.7bn.

Vodafone, whose shares added 1.9 per cent to 131.4p last night, suffered from weaker trading in the UK and Spain, as well as lower-than-expected sales of equipment such as handsets and USB data cards in the three months to the end of June.

Tuesday's share price slide marks a disappointing exit for Arun Sarin as he prepares to hand over the reins to deputy chief executive Vittorio Colao next week after five years in charge.

Vodafone said it could start the share buyback immediately under authority given at its annual shareholder meeting last July, and would need approval from its meeting on 29 July to complete it.

Analysts at Cazenove said despite the "surprising move", it was difficult to see the shares staging any sustained recovery.