What would happen if Vodafone was a mutual, owned by everyday people rather than shareholder investors?
Vodaphone announced recently that it was selling its 45% stake in the US mobile company, Verizon Wireless, for over £80 billion. With much praise in the press, Vodaphone said that £66 billion of the sale will go to its shareholders. With nearly 50%of its shareholders in the UK, this will give a much-needed boost to the UK economy, equivalent to around 2% of GDP and some in the press said, akin to quantitative easing.
That’s a lot of money, no doubt, and it shows the ability of businesses to generate and distribute wealth.
The thing is, though, over 75% of Vodafone’s shares are held by ten investment institutions. So only a small amount of money will go into the pockets of real people or into the economy in any meaningful sense. Most of the pay-out will be re-invested in the markets with little tangible impact for economic wellbeing and the wider economy.
If it was a mutual things would be different.
If Vodafone were owned by its 19.3 million UK customers, rather than shareholders, each customer owner would get around £3,500, giving them a significant chunk of money. If Vodafone were owned by its 84,000 staff, the share each would receive would be considerably larger.
Not only would a mutually owned Vodafone put money in people’s pockets and boost the economy, it would share the wealth generated by the business amongst around 40% of the UK adult population.
And that’s without even mentioning tax. Which, it turns out, Vodafone will pay very little of because of its clever tax arrangements. But that’s a different story.