The mobile phone group mmO2 is to offer more than 800,000 private investors a free dealing service in the hope of removing most of them from the company's share register, making it cheaper to administer the company's newly instigated dividend policy.
The mobile phone group mmO 2 is to offer more than 800,000 private investors a free dealing service in the hope of removing most of them from the company's share register, making it cheaper to administer the company's newly instigated dividend policy.
The initiative to clean up the share register is part of a corporate restructuring necessary for the payment of a maiden dividend, announced at mmO 2's interim results yesterday, which is due to be paid in August.
The company has 875,000 shareholders with holdings of 500 shares or less. Most of these were given shares in mmO 2 as BT shareholders when the mobile arm was demerged from its former parent three years ago tomorrow.
Offering small shareholders a cost effective way of selling their shares reduces the administration costs of subsequently distributing dividend cheques.
The company said it was responding to interest in such a scheme from private shareholders "The board also intends to explore options to offer the large number of very small shareholders the opportunity to monetise their holdings without incurring transaction costs. This would reduce the administrative costs that would be incurred in making regular dividend payments," said the company.
mmO 2 announced yesterday that it was instigating a policy of regular, sustainable dividends which would begin with a payout for the second half of the current financial year that ends in March. The amount will be declared in May at the company's final results but analysts at Merrill Lynch and Cazenove estimate the initial payout will be about 2p-a-share, equal to a payout of about £174m.
Peter Erskine, the company's chief executive, said it had a target of paying out 50 per cent of underlying earnings, which are before goodwill, exceptionals and amortisation. "We will build up to that. It will be guided by cash flow," said Mr Erskine.
In the six months to 30 September, underlying earnings rose from 1.5p last year to 4.5p this year. The company's shares rose 5.2 per cent to 111.75p on the back of a strong set of interim results. Its turnover rose 23 per cent to £3.3bn while operating profit jumped to £251m from £66m. mmO 2 announced that customers grew by 15 per cent to 22m and that further investments would be made in its German network over the next five years. In the UK, customers grew to 13.7m while revenues grew by 20 per cent to £1.8bn.
Mr Erskine said he thought it "unlikely" the company would be looking for acquisitions over the next two years.Reuse content