Vodafone will pay £2bn divi despite crisis
VODAFONe has swung back into profit and stuck by its £2.1bn dividend, despite pressures from the coronavirus crisis.
In a boost to savers and pension funds, the telecoms giant promised an end-year payout of 4.5 euro cents (4p) per share to investors – taking the fullyear total to 9 cents (8p).
that was after it reported profits of £795m for the year to March 31, compared to a £2.3bn loss in 2019. Revenues rose from £9.5bn to £9.9bn over the same period, more or less what analysts had predicted.
Following the announcement, the shares surged 8.7pc, or 9.88p higher to 122.88p.
the decision to hold the dividend came just days after rival Bt suspended its payout for the first time since its privatisation in the 1980s.
It was also despite a warning that revenues from roaming calls were taking a hit because of falling international travel and that customer spending could be affected by upcoming economic downturns. the company has 65m mobile contract and 25m broadband customers in europe, with about 2.5pc of its revenues coming from roaming charges.
But boss Nick Read said the balance sheet remained strong and that the switch towards home working during the pandemic had resulted in some benefits, including a huge surge in mobile data usage.
He said people were making longer phone calls, working long hours and using phones to connect to the internet from home, adding: ‘Generally we are seeing a spike in demand.’
And the chief executive said that the company would be sticking to its ‘progressive’ dividend policy, although that is after it slashed the payout last year. there had been fears it could reduce or suspend its dividend, as many other major firms have done during the virus crisis to save cash.
supermarket chain Morrisons yesterday became the latest to say it would wait for the outbreak to die down before taking a decision on its own payout.
Only a handful of blue-chip giants including Vodafone, tesco, standard Life Aberdeen and Unilever have so far said they will protect dividends.
Vodafone shares are among the most widely held by small shareholders and pension funds, so any cut would represent a hit to savers.
But Read said: ‘We are reinforcing that we’ve got good headroom given prevailing economic outlooks, so we stick with the dividend policy we have. We have also continued to invest in our fixed and mobile network infrastructure and digital services, to provide faster speeds, as well as successfully managing the recent surges in demand.’
Read said plans to separate and potentially list its mobile towers business on the stock market were on schedule, and that London and Frankfurt remained the two top competitors for the float.