In a surprise move over the weekend, Etisalat bought a 9.8% stake in Vodafone for US$4.4 billion.
In particular, Vodafone welcomed the investment, as E& said it supported Voda’s strategy and had no intention of acquiring it.
Etisalat has agreed to build a long-term relationship with Vodafone. The UK-based group will announce its full-year results tomorrow when it will report progress on its long-term strategic plans.
Karim Bennis, group CFO of e&/Etisalat, whose official name is Emirates Telecommunications Group, said: “e& is fully supportive of Vodafone’s board and existing management team and its current business strategy announced in November 2021.”
As it stated, it does not seek board representation and is confident that organic business activity, as well as other potential strategic transactions, will be able to unlock value for the company. The company plans to remain a long-term, supportive shareholder in Vodafone and is not seeking to exert control or influence over the company’s board of directors or management.
Hatem Dowidar, CEO of Vodafone, said: “Vodafone is at the core of digital communications in Europe and Africa, offering a compelling business, critical connectivity, and digital services.
This is a strong endorsement of Vodafone’s strategy and most importantly its board, despite the company’s failed attempts to consolidate in key markets. This move alone might cause tension with shareholders who are eager for Vodafone to consolidate in key markets.”
In his analysis of the potential implications of Cevian Capital’s stake in Vodafone, analyst Kester Mann with CCS Insight noted that the deal could have implications for the consumer and connectivity sectors.
“The surprise move from e& could offer some relief to CEO Nick Read after Cevian Capital began to exert pressure on the company,” said Mann.
Vodafone’s fixed and mobile investments across its broad footprint could benefit from the support offered by a new, wealthy shareholder. Additionally, it could help Cevian win deals in more competitive European markets, including the U.K., Italy, Spain, and Portugal.”
Reports last week suggested Vodafone and CK Hutchison were discussing the possibility of merging, which would reduce the UK market from four to three.
