Mobile phone group Vodafone announced a surprise 1 billion-pound ($2 billion) share buyback program on Wednesday, saying a big share price fall in the wake of Tuesday's trading update left the stock undervalued.
"The board of Vodafone Group Plc has considered the market reaction to the group's Interim Management Statement, issued on July 22, and has decided to introduce a 1 billion-pound share repurchase program with immediate effect," the world's biggest mobile phone group by revenue said in a statement.
"This action reflects the board's belief that the share price significantly undervalues Vodafone." Vodafone shares slumped almost 14 percent on Tuesday after the group said its full-year revenue would be at the bottom of a previously stated forecast, denting hopes the Britain-based firm would be relatively resilient to an economic downturn.
Vodafone said the buyback would need shareholder approval at its annual general meeting on July 29.
"The maximum share price payable for any 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," it said.
Vodafone shares closed at 129 pence on Tuesday, valuing the business at about 80 billion pounds.