A Middle Eastern telecommunications group has taken a nearly 10% stake in Vodafone as the British mobile phone company comes under pressure for a business overhaul.
State-controlled Emirates telecoms group, which was recently rebranded from Etisalat to e&, is now Vodafone’s largest shareholder after confirming a £3.3bn raid on the British group on Saturday.
E& said it made the investment “to gain meaningful exposure to a global leader in connectivity and digital services” and did not intend to launch a tender offer, a statement that prevents the company from do so for at least six months.
The Abu Dhabi-based group, which has set up a special holding company, Atlas 2022, to control Vodafone’s stake, said it plans to be a “long-term supporting shareholder of Vodafone and does not seek to exercise control or influence the company’s board or management team”.
Vodafone claims on its website to provide government services, including the Ministry of Justice, which means any new owners should be carefully vetted.
A government spokesperson said: “The government has robust processes in place to ensure its IT systems are secure and protected against threats. When national security concerns arise regarding an acquisition, the government has the power under the National Security and Investment Act to intervene if necessary.
Vodafone chief executive Nick Read is under pressure to simplify the sale of subsidiaries and improve returns after his share price fell more than 20% since he took office in 2018.
E&’s involvement comes after Vodafone revealed it was in talks with rivals in the UK, Spain, Germany and Italy, in apparent response to pressure from Cevian, the biggest activist investor of Europe, which took a stake in Vodafone and called for a business shake-up. at the top.
Cevian, headquartered in Sweden and known for taking longer-term positions to turn around businesses without taking aggressive action, is looking to shore up Vodafone’s sprawling empire to focus on its most profitable markets and inject more experience in telecommunications at board level.
Hatem Dowidar, Managing Director of E& who is a former Vodafone executive, added that he “looks forward to building a mutually beneficial strategic partnership with Vodafone with the aim of driving value creation for both our businesses, exploring opportunities in the rapidly developing world telecom market and supporting the adoption of next-generation technologies”.
E& recently bought a majority stake in Maroc Telecom and acquired Emirati online grocery market ElGrocer with the aim of becoming a global technology investment conglomerate.
Vodafone, which is due to update the city on its annual results on Tuesday, said it looked forward to “building a long-term relationship with Etisalat” and continued “to make good progress with our long-term strategic plans. term”. ”.
Vodafone shares closed down 0.9p at 117.82p on Friday, valuing the company at £33bn.