(Alliance News) - Vodafone Group PLC on Wednesday said it began a share buyback programme of up to EUR500 million, a day after saying it would begin a wider EUR2.0 billion scheme following Spanish authorities giving the green light to the planned sale of its Spanish business.

The Newbury, Berkshire-based telecommunications provider said the programme would begin today and end no later than August 15. Morgan Stanley will conduct the buybacks on Vodafone's behalf.

Shares in Vodafone were up 4.7% to 76.70 pence each in London on Wednesday morning.

Vodafone said on Tuesday that it planned to conduct the programme as an initial tranche of returning EUR2.0 billion to shareholders over 12 months.

This was after Spanish authorities greenlit its planned sale of Vodafone Spain to Zegona Communications PLC, which is expected to complete at the end of May.

At that time, Vodafone will receive EUR4.1 billion in cash and EUR900 million in the form of redeemable preference shares.

Zegona said the acquisition is classified as a reverse takeover under listing rules and it has applied for the around 704.1 million Zegona shares to be re-admitted to the standard listing segment of the Official List and to trading on the Main Market of the London Stock Exchange.

Zegona is led by former Virgin Media executives and has bought and sold two Spanish telecoms businesses, Telecable and Euskaltel, in the past.

Under the sale agreement, Vodafone and Zegona also will enter into a brand licence agreement, which permits the use of the Vodafone brand in Spain for up to 10 years post-completion. Vodafone and Zegona will enter into other transitional and long-term arrangements for services including access to procurement, internet of things, roaming and carrier services.

Zegona said it will fund the acquisition through a combination of new debt, Vodafone financing, and a new equity raise.

Shares in Zegona were up 0.9% to 235.10p each in London on Wednesday morning.

Earlier Tuesday, Vodafone reported results for the year to March.

It said pretax profit fell 88% to EUR1.62 billion from EUR13.07 billion the year prior.

Vodafone said this primarily reflects business disposals in the prior financial year, in particular the EUR8.6 billion gain on the disposal of Vantage Towers.

Revenue declined by 2.5% to EUR36.72 billion from EUR37.67 billion a year prior, reflecting the disposals of Vantage Towers, Vodafone Hungary and Vodafone Ghana in the prior financial year and adverse currency movements.

Group service revenue increased by 6.3% to EUR29.91 billion from EUR30.32 billion, with Europe, Africa and its Business division all growing, Vodafone said.

Earnings per diluted share fell to 4.44 euro cents down from 43.51 cents.

Vodafone declared an unchanged total dividend 9.0 cents per share, including a final dividend of 4.5 cents.

By Greg Rosenvinge, Alliance News senior reporter, and Jeremy Cutler, Alliance News reporter

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