Vodafone’s strategic agreement with e& did little to move shares, although it raised eyebrows about what may come next.
Emirati telecoms company e&, formerly known as Etisalat, has aggressively built its stake in Vodafone over the last 12 months to become the telecom group’s largest shareholder with a 14.6% interest.
Today’s announcement is a further sign that e& is looking to exert greater influence at the Newbury-based company.
What does e& want?
e&’s ambitions to flex its muscles at Vodafone was first broken by Bloomberg last month, with its equity research team suggesting the increasingly hands-on style was a departure from its typical laissez-faire approach.
Robert Grindle, head of European TMT research at Deutsche Bank believes this could be down to its interest in Vodafone’s African unit, Vodacom.
Vodafone has reportedly been mulling options for its African arm, such as merging it with other operators or selling a stake in the company.
e& may be looking to expand its reach in Africa through Vodacom, building on operations it already has in some Arab nations and parts of West Africa.
A partial sale in its third largest business in terms of revenue, behind Germany and the UK, might be in the best interest of Vodafone too, as it looks to wipe its huge debt bill of €45bn (£39bn), more than its market cap valuation of €28bn.
Vodafone was told to simplify its business and clear some of its debt by activist investor Cevian Capital, which bought shares in 2021 before dumping them all in January this year, with the Swedish hedge fund frustrated at the pace of the turnaround.
The telecoms giant has already sold its Hungarian business for €1.7bn, disposed of its 70% stake in Vodafone Ghana and offloaded a stake in its Vantage Towers business.
Vodacom may be the next arm of the sprawling business to be syphoned off, but the group's global status and sky-high debt put all its operations in the shop window.
Vodafone was approached for comment.