A clear majority of Vodafone investors yesterday backed management in rejecting a rebel shareholder's call for the mobile phone operator to gear up and spin off its minority stake in Verizon Wireless, the US mobile group.
Based on initial proxy returns - which do not include all votes cast at Vodafone's annual meeting yesterday - the activist investor, Efficient Capital Structures (ECS), looked as though it had failed to attract the votes or abstentions of investors holding more than 10 per cent of Vodafone's shares.
ECS, which owns just 0.0004 per cent of Vodafone, had urged the firm to spin off its 45 per cent-owned US asset Verizon Wireless and release cash for investors by issuing £34 billion (€50.7 billion) worth of bonds.
Before the vote, ECS, which is backed by John Mayo, former deputy chief executive of Marconi, claimed it had won the argument in favour of Vodafone changing strategy on its 45 per cent stake in Verizon Wireless.
Glenn Cooper, chairman of ECS, said he expected the investor group to retain its small stake in Vodafone because it believed it would see an increase in value from a new strategy.
He claimed Vodafone's efforts to defeat the ECS resolution, during discussions with investors, meant the British group would have to change its strategy on Verizon Wireless, possibly within a year.
"If they have been successful, and I believe they may have been, in striking that deal with shareholders, I would concede we are unlikely to get a majority for that resolution," he added.
There are more than 400,000 Vodafone shareholders in the Republic as a result of the spin-off of the former Eircell from Eircom in 2001, making it one of the most widely-held stocks for Irish investors.
Vodafone's board met on Monday ahead of the annual meeting. However, it is not believed to have taken a final decision on whether to exercise a put option entitling the telecoms group to sell up to $10 billion (€7.23 billion) worth of Verizon Wireless shares to Verizon Communications, which owns 55 per cent of the US mobile operator.
Vodafone declined to comment. It must decide by August 9th whether to exercise the put option.
Vodafone chief executive Arun Sarin, who last year rejected calls by a small number of high-profile investors to sell its stake in fast-growing Verizon Wireless, said last week the value of the asset had risen by $10 billion to $15 billion over the past year alone.
"The issue of Verizon Wireless has been raised time and time again. If the value is rising and there is no current material benefit then there is more to look forward to," a retired shareholder, Page Victor, said ahead of the voting.
Verizon Communications, the second-largest US telecoms company, wants full ownership of Verizon Wireless, but has been unable to interest Vodafone in selling its stake.
