Vodafone Group Plc doubled its half-year dividend to 1.91 pence, the top end of forecasts, and boosted a full-year share buyback programme in a widely-anticipated handout to investors. Vodafone, the world's largest cell phone group by revenue, said on Tuesday it also expected to double its final dividend as it extended a 3.0 billion pound ($5.6 billion) share repurchase plan by about 1 billion pounds in the year to March 2005.
Given Vodafone's relatively low debt, robust cash generation, lack of major acquisitions in the short term and repeated company pledges to increase shareholder returns, most analysts had forecast a 75-100 percent half-year dividend hike.
"I think this represents a good balance," said one of Vodafone's top 10 institutional investors. "Paying a more generous dividend out of very strong cashflow from a very strong financial position does not in any way impede the business."
The payout hike is part of a trend in an industry that was forced to slash costs and debt after conceding it overspent on acquisitions and on over 100 billion euros ($130 billion) of third-generation (3G) mobile phone licences four years ago.
Last week, one of Europe's former top debt offenders, Deutsche Telekom, re-instated dividend plans and mmO2 Plc, Europe's sixth-ranked mobile phone company, is expected to outline plans for a final dividend on Wednesday.
Vodafone's payout bonanza will total 6.0 billion pounds in the year to March 2005 and help drive net debt up by 1.5 billion pounds.
Vodafone said it had won 7.4 million new customers in the first half of the year, excluding those acquired from buying into other companies, swelling its subscriber base to 146.7 million. Only China Mobile (Hong Kong) Ltd, with about 194.4 million subscribers, is larger.
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