E& gets pushy with Vodafone
E& has reportedly further increased its stake in Vodafone and is now looking to make changes at the telco group’s board.
The United Arab Emirates-based operator has raised its holding in the UK-based telecoms group to 14.6%, Bloomberg reports, citing a regulatory filing.
That’s just a small hike on the firm’s previous 14% stake, a position it built up in increments since its first share acquisition back in May last year. But at around US$450 million per percentage point, it’s not a small sum to commit. We don’t have a value for any new transaction, incidentally; that figure is based on e&’s initial Vodafone foray eleven months ago. Vodafone’s share price has continued to slide in the interim, so the numbers could well look different now. Nonetheless, e& is clearly not afraid of throwing more cash at Vodafone, presumably attracted by that subdued stock price.
But more than that, this latest deal shows that e& is keen to exert some sort of influence over Vodafone.
According to the newswire, e& opened discussions with Vodafone earlier this month about its non-executive directors; essentially, it’s pushing for change at board level, presumably with a view to gaining influence in its own right. There has been no formal comment on that assumption from either side though. It points out that two of Vodafone’s non-executive directors, Clara Furse and Crispin Davis, could well step down this year having each served a nine-year term, the maximum recommended under the UK’s corporate governance code. Perhaps e& is seeing a handy opening.
It might well not be the only one. E& is one of a few big names to have bought into Vodafone of late, Liberty Global and Xavier Niel’s Atlas Investissement being the most noteworthy of the others. It would not be a surprise to see either of those shareholders seek to exert more control over the troubled, leaderless telco in the not-too-distant future.
E& recently dismissed the idea of making a takeover bid for Vodafone, but its latest move suggests it is not simply buying up cheap shares to make a quick buck either.
“The pursuit of board representation by Vodafone’s largest shareholder e&, while expected given its growing 14.6% stake, is a positive move in light of e&’s plan to be a long-term investor in the carrier, making further stakebuilding likely,” the newswire quoted Bloomberg Intelligence analyst Erhan Gurses as saying. “The Emirati company’s push is a change from its original position, suggesting it may become a pro-active force to ensure execution aligns with its long-term strategy.”
So it seems we can expect e& to throw more cash at Vodafone and work harder to make its voice heard.
Given that the telco has been without a permanent chief executive since Nick Read stepped down late last year, and that as a result its M&A opportunities in the UK and possibly elsewhere appear to be on ice, it’s probably just as well that someone is taking an interest.
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Dear Sir
This is welcome news with E& taking a substantial stake in Vodafone. Truly undervalued as a stock. I feel the board has got stale and with no “CAPTAIN AT HEALM” it’s losing time and ground to rivals. Sadly the company has become stagnant, through it’s senior management.
It needs new blood to drive it to where it deserves to be.
I believe I could have taken this further in new and emerging markets, whilst reducing the significant debt.
KR. N C WIngfield
Over the years, Vodafone has experienced a significant decline. The company’s poor management, high bonuses, and mishandling of cashflow due to its ultra high margin has resulted in enormous waste of money, including some of the worst choices ever made regarding merges and acquisitions.
For instance, the recent acquisition of CYTA_GR saw Vodafone “paid-even” with money that was owed to them by CYTA, which was rumoured to be significantly more than CYTA’s valuation at that time.
Another issue with Vodafone is its poor reporting, with finance people using every possible method to deceive their supervisors and board by using numerous KPIs and abbreviations that do not reflect reality.
In Greece, local directors tout the successful management and business handling by promoting ARPU, which stands for Average Revenue Per User. However, they conveniently hide the fact that they pay a particular customer with a 350€ per year subsidy or tech fund. In reality, the customer would pay 420€ for the whole year of services and then receive a credit note of 350€ on the 12th month.
As a result, the net customer spending for a whole year of services is only 70€ or approximately 5.8€ per month, which begs the question of how much profit Vodafone can make from a customer who only contributes 6€ per month. These findings are unique to Vodafone and are executed solely by the company.
Unfortunately, Vodafone’s sole focus seems to be on the bonus its employees receive at the end of each month, which leaves the company going nowhere and chasing its tail like mad dogs. A comprehensive audit from top to bottom would undoubtedly uncover a lot of issues that need addressing. Trust me.