Vodafone has launched a billion-pound share repurchase scheme in the wake of the company's Tuesday share slump, in a bid to prove the current share price undervalues the company.
On Wednesday the company said the programme would commence with immediate effect. The previous day, Vodafone's shares fell by almost 14 percent, after the operator released an interim management statement warning revenues would be "around the bottom" of forecasts.
"The board of Vodafone Group… has considered the market reaction to the Group's Interim Management Statement, issued on 22 July, 2008, and has decided to introduce a £1bn share-repurchase programme with immediate effect," Wednesday's statement read. "This action reflects the board's belief that the share price significantly undervalues Vodafone."
The maximum price the operator will pay for shares will be "no greater than 105 percent of the average of the middle market closing price of the company's share price on the London Stock Exchange for the five business days immediately preceding the trade date on which any shares are purchased," the statement read.
By 10:25am on Wednesday, Vodafone's shares had gone up by 4.1 percent to a price of £1.34 per share.