O2 investors top 50% profit on shares

More than 833,000 small investors in the mobile phone operator O2 were set for a large payout today after cashing in their shares at a premium rate.

O2, which changed its name from mmO2, said investors who received shares when it split from BT in 2001 were likely to bank profits of more than 50%. The shareholders acquired their shares at a price close to 80p. This morning they were trading at 127p.

Around 1.5bn shares were offered to O2 - five times more than the limit announced in January under plans to tighten its fragmented shareholder base. Following a review, O2 said the number of investors on its books would be cut in half after it accepted applications from 833,011 shareholders owning 1,000 shares or less.

O2 wanted the move because it was likely to cost more to send dividend cheques than the amount being paid to small investors. There were also concerns that minor shareholders would be restricted when trying to sell their shares on the open market because of the broker fees involved.

Under the offer from O2, investors selling their shares will receive the market price plus an additional 5p. It forms part of a corporate reorganisation that means O2 can pay a dividend at the end of its financial year. Analysts expect a maiden payment of between 1p and 2.54p a share.

O2 has also been delisted from the New York Stock Exchange as it has no plans to develop any operations in the US.

A spokesman for O2 expressed delight at the simplification of its shareholder base, although the company will still rank among the top 10 firms in the FTSE 100 index for retail investors.