Vodafone to buy back £1bn shares

Vodafone has made a shock decision to launch a £1 billion share buyback scheme.

Shares will be bought back at a price of no more than 105 per cent of average price of stock for the five days before the trade.

The move follows a fall in the Vodafone's share price yesterday after the firm warned investors full year revenue would be at the bottom of its £39.8 billion to £40.7 billion outlook range, blaming recent "economic weakness".

The firm announced the £1 billion share repurchase programme was a response to the market reaction to yesterday's figures.

"This action reflects the board's belief that the share price significantly undervalues Vodafone," a statement read.

The deal remains subject to approval at the Vodafone AGM on July 29th.

The Vodafone share price rose 0.43 per cent on the news to 129.55p at 13:16 BST, after a 20p drop yesterday.

Nick Raynor, investment adviser at The Share Centre, said: "The value of shares it is planning to buy back is only 1.5 per cent of Vodafone’s current market capitalisation (company value) so it could be seen as a symbolic gesture to try and stabilise the share price and reassure shareholders.

"After the recent fall in the share price we still feel Vodafone is an attractive prospect for those investors looking for growth or indeed for income seekers, as it is now offering a yield of over five per cent."