£3bn buyback for Vodafone

SIR Chris Gent, beleaguered chief executive of Vodafone, is weighing up a £3bn plan to buy back shares in a desperate attempt to restore investor confidence.

Details of the scheme could come with Vodafone's results on Tuesday. These are expected to show a huge loss after the troubled mobile phone giant was forced to make multi-billion pound writedowns in the value of businesses it bought at the height of the telecoms boom.

Vodafone already has shareholder permission to buy back up to three billion of its shares, about 4.5% of the total, at any time. It is thought Gent is likely to signal he is now going to make use of that freedom and start buying in shares.

With fewer shares in circulation, the price should rise. It slumped to a record low of 92 1/2p earlier this month - less than a quarter of the 399p high in March 2000.

In a broader move to halt the slide in shareholder confidence, Vodafone is also believed to be considering a larger than usual increase in its dividend as well as a cut of about £1bn in planned capital spending.

Gent has not yet faced open hostility or calls to quit from investors. But he is coming under increasing pressure as many shareholders are alarmed at Vodafone's drop in value from a peak of £270bn to this month's low of £63bn.

Analysts say much of the fall can be blamed on the meltdown in telecom values. But it was Gent who masterminded Vodafone's huge acquisition spree, including takeovers at the top of the market.

Paying too much for assets whose price has crashed will account for writedowns this week that could total tens of billions of pounds. That will leave Vodafone, whose half-year losses were £8.4bn, deeper in the red.

At its half-year results, Vodafone slashed £4.5bn from the value of recent purchases, including its Arcor fixed-line business, bought as part of its £75bn takeover of German group Mannesmann in 2000. Gent will try to dispel fears that growth at Vodafone is slowing by saying that turnover has risen from £15bn to £22.6bn. Before writedowns and one-off costs, profits are expected to total about £6bn.

But with the launch of the muchhyped-3G services still some way off, analysts remain sceptical about the outlook for Vodafone. Philip Townsend, a telecoms analyst with broker Arnhold & S. Bleichroeder, said that Vodafone was a mature business and he valued its shares at only 65p to 75p compared with the Friday closing price of 113p.