e& buys up more of rudderless Vodafone


e& has acquired another tranche of Vodafone shares taking its stake in the troubled international telecoms group to 12%.

The United Arab Emirates-based operator made the purchase on Tuesday, it revealed in a brief statement to the Abu Dhabi Securities Exchange. As such, it now holds 3.27 billion Vodafone shares and has upped its stake from the 11% it claimed after a similar purchase in December and the initial 9.8% holding it acquired for US$4.4 billion back in May.

The motivation behind the e&’s latest share purchase is the same as it was on both previous occasions.

“Executed at what we believe is an attractive valuation, the investment rationale is unchanged from our announcement on the 14th of May 2022, specifically to obtain significant exposure to a global leader, and leverage potential commercial partnership and realise future return on our investment,” its statement reads.

That’s actually pretty damning from Vodafone’s point of view.

It’s no secret that Vodafone’s share price is depressed, hence the attractive valuation. The same was true eight months ago when e& first bought in, and in fact the situation has worsened in the interim. This latest deal had little impact on the telco’s stock, which, after a little dip, is trading at below the £0.92 mark. But that’s a fair fall from £1.18 in mid-May, when e& paid the equivalent of about £1.30 per share for its initial stake. There was no price given for the latest deal, incidentally.

It’s also a big drop from over £2.25 five years ago and, crucially, the 40% decline in valuation suffered under the tenure of now-departed – but still advising – chief executive Nick Read.

Vodafone announced Read’s decision to step down in early December – one of those ‘by mutual consent’ deals with the board – and put finance chief Margherita Della Valle into the top job on an interim basis. She’s still there, and while endless rumours swirl over who will be appointed on a permanent basis, the lack of leadership is not helping Vodafone’s plight.

Della Valle is not out of the running as a permanent replacement for Read; after all, Read himself served as CFO before becoming CEO, and Vodafone has a track record of appointing from within. The smart money is on an external appointment though, with Bloomberg having reported last week that the telco group has hired headhunter Egon Zehnder International to lead the search for a new chief exec. Its sources, unnamed of course, noted that the search is in the early stages, hence Vodafone could be rudderless for longer than it would like.

The newswire chose not to add to the speculation over who the new chief executive will be, but names in the frame over the past month or so have included former Vodafone man Nick Jeffery, who now leads Frontier Communications in the US; Informa CEO and former Ofcom head Stephen Carter; Verizon’s consumer CEO Ronan Dunne; European telecoms veteran Olaf Swantee; and Liberty Global’s chief development officer Andrea Salvato, amongst others.

Vivek Badrinath, CEO of Vodafone’s Vantage Towers business, has also been mentioned repeatedly by the media, but surely that would count as an internal appointment. With headhunters on the case, he now seems like an unlikely choice.

Whoever the new leader turns out to be, he or she will face a big challenge in turning Vodafone around. The group is in the middle of reshape that has seen it pull out of certain markets, but it is still under a lot of pressure from disgruntled shareholders.

The strong fundamentals of the telecoms space mean that a depressed share price will always attract investors looking to make a few quid. Vodafone really needs to get that share price up.

As far as e& is concerned, the Vodafone investment is almost certainly a financial move. The company can say what it likes about its shareholding in the telco providing opportunities for commercial partnership, but it could surely achieve that without buying more shares. e& is looking to make money from Vodafone’s plight – and why not, indeed? – and at this rate it won’t be the only one. And Vodadfone will increasingly struggle to control its own destiny.


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