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March 5, 2006 8:33 pm

Vodafone shareholders set for bonus

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Vodafone hopes to appease shareholders by returning to investors the bulk of several billions of pounds that may be raised through the possible sale of its struggling Japanese business.

Arun Sarin, chief executive, signalled that the bulk of the funds from a disposal of at least a controlling stake in Vodafone Japan would find their way back into shareholders‘ pockets.

The group confirmed on Friday it was in talks with Softbank, the Japanese technology group, about the sale of at least a controlling stake in the troubled unit.

Vodafone owns 97.7 per cent of the Japanese operation, which lies a distant third in the market behind NTT DoCoMo and KDDI. Analysts estimate the business is worth at least £5bn but it is thought to be valued on the group’s books at closer to £10bn.

Vodafone on Sunday said no firm decision had been made on what to do with any proceeds if the deal were to go through.

Last week, the group bowed to pressure from shareholders and acknowledged its growth profile was slowing, amid intense competition in its core markets, when it issued its third profit warning in the past four months. The warning was accompanied by a goodwill write-down of £23bn.

In the current year Vodafone is expected to return about £9.5bn to shareholders, through a mixture of dividends and share buy-backs. Investors are pressing for more.

Mr Sarin’s attempts to appease disgruntled investors came amid growing speculation of internal pressure over his position at the weekend.

Vodafone on Sunday played down a report suggesting that Lord MacLaurin, its chairman, was losing patience with Mr Sarin.

Lord MacLaurin is reported to have considered telling Vodafone’s board that he would quit early if they did not get rid of Mr Sarin.

A Vodafone spokesman said: “The board is supportive of Arun and I’m not going to speculate about the views of individual members.”

Lord MacLaurin, due to step down on July 24, could not be reached for comment.

A separate report suggested that Sir Christopher Gent, Vodafone’s honorary life president and former chief executive, had planned to vote against the re-election of Mr Sarin at the company’s annual meeting last year after a disagreement over who should become the next chief financial officer.

It was suggested that Lord MacLaurin may have intervened and convinced Sir Christopher to change his mind.

Vodafone on Sunday played down suggestions of Sir Christopher’s dissent. Sir Christopher was not available for comment.

Vodafone said: “The fact is, Chris Gent voted his holding in support of Arun Sarin.”

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