Xavier Niel looks to streamline Vodafone via 2.5% stake buy

Xavier Niel has acquired a 2.5% stake in Vodafone, a move that increases the pressure on the international telco group to streamline its business and get on with some M&A.

The French businessman, who owns expansionist operator Iliad as well as other telecoms assets in Europe, has picked up the shares through investment vehicle Atlas Investissement. The firm did not disclose the value of the transaction, but Bloomberg puts it at around £752 million. At the time of writing, Vodafone’s shares were up by just over 2% on the news to 108.58 pence.

It’s tempting to look at this as purely a financial deal. Vodafone’s shares have been on a downward trajectory this year, but with a solid asset portfolio, there’s clearly come opportunity there. And indeed, based on Atlas Investissement’s statement on the deal, that is in its mind. But looking beyond the potential investment upside, there could well be an impact on Vodafone’s business from an operational point of view and, given the identity of the buyer, there will doubtless be questions raised over a possible takeover of some of the telco group.

Atlas Investissement said it sees Vodafone as an attractive investment opportunity, due to the quality of its portfolio of assets and the solid underlying trends in the broader telecoms sector. “Atlas Investissement is supportive of Vodafone’s publicly-stated intention to pursue consolidation opportunities in selected geographies, as well as its efforts in infrastructure separation,” it added. “Atlas Investissement’s view is that there are opportunities to accelerate both the streamlining of Vodafone’s footprint and the separation of its infrastructure assets, further reduce costs, improve profitability, accelerate broadband development in Germany and other geographies and enhance focus on innovation,” its statement reads.

All of which suggests that it is looking to shake things up a bit at the operator group.

That focus on consolidation and accelerating the streamlining of the telco’s footprint is hardly a surprise, given that Iliad made a failed bid – reportedly valued at north of €11 billion – to acquire Vodafone Italia back in February.

Atlas Investissement spelled out that it is independent of Iliad, but it wouldn’t be at all surprising to see it pushing Vodafone in that kind of direction. Vodafone itself has made no secret of the fact that it sees consolidation in its future.

“We are pragmatically pursuing value accretive in-market consolidation to deliver sustainable market structures in our major European markets,” the telco said in its first half financial report published just under a year ago.

Italy, Spain and UK remain the most likely candidates, but thus far talk of in-market tie-ups has come to nothing. The appearance of a Niel-backed investment vehicle on the scene could well prove a shove in the right direction; the Frenchman is not noted for being overly cautious. We could finally see some action at Vodafone.

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