French billionaire Xavier Niel has scooped up a 2.5 per cent stake in Vodafone, paving the best way for the telecoms entrepreneur to probably shake up the underperforming UK group.
Niel, who purchased the stake by way of his funding car Atlas Investissement, hinted at his intent in an announcement that mentioned there have been “opportunities to accelerate . . . the streamlining of Vodafone’s footprint and the separation of its infrastructure assets”, in addition to enhance profitability.
The surprising transfer comes after Niel took his telecoms group Iliad personal final 12 months and picked up the tempo of acquisitions in Poland and elsewhere to achieve about 50mn lively subscribers and €10bn in revenues.
It stays to be seen if the billionaire will add to his stake or ask for illustration on the board, however he has already proven that he has a report of appearing like an activist investor. He initially purchased a small stake in French actual property group Unibail in 2020 after which rapidly added to it, appearing with an ally to oust the chief govt, change the group’s technique and be a part of the board.
“He would have to get a lot more involved to ask for a board seat,” mentioned Robert Grindle, an analyst at Deutsche Bank. “By default, he’s an activist now . . . even if he doesn’t call himself one. Anyone who wants to buy the stock now [will] see catalysts.”
Niel’s funding in Vodafone comes after one other French telecoms billionaire Patrick Drahi progressively constructed an 18 per cent stake in BT final 12 months. That sparked widespread hypothesis that the veteran dealmaker might ultimately attempt to wrest full management of the corporate.
Grindle added that the 2 billionaires have been prone to have seen “lots of value” in telecoms belongings that the “public markets were not valuing . . . right”.
The 2.5 per cent stake that Atlas has constructed is price about £750mn at present market costs, though it was not disclosed whether or not the stake was all in shares or partly in derivatives.
Vodafone in February rejected an €11bn bid for its Italian enterprise from Iliad, a supplier in France, Italy and Poland owned by Niel, and personal fairness fund Apax. The supply represented about seven instances earnings earlier than curiosity, taxes, depreciation and amortisation.
Vodafone’s share worth gained 2 per cent in early morning buying and selling, however was nonetheless down 6 per cent within the 12 months to this point, at 108.5p.
The international telecoms group has been underneath strain because it emerged that Cevian Capital, Europe’s largest activist investor, had constructed an unspecified stake within the firm, and was angling for an overhaul of what traders believed to be a very convoluted enterprise mannequin.
Cevian has referred to as for the corporate to shed poorly performing elements of the enterprise and full mergers or acquisitions in markets that chief govt Nick Read has mentioned he’s trying to do offers in, specifically the UK, Italy and Spain.
Read can be aiming to promote a big stake within the group’s masts enterprise, Vantage Towers, that was listed final 12 months and has obtained curiosity from a number of personal fairness teams, in keeping with an individual briefed on the discussions.
Several Vodafone traders have mentioned they’re eager for Vodafone to promote a big stake in Vantage quickly, which might liberate money to scale back debt and pursue offers in each core markets in addition to these that aren’t performing as effectively. Other telecoms teams reminiscent of Altice and Deutsche Telekom have spun off towers companies at wealthy valuations.
Last month, Vodafone agreed to promote its Hungarian enterprise for $1.8bn to 4iG and Corvinus Zrt, a Hungarian state holding firm.
In May, state-controlled Emirates Telecommunications Group introduced that it had acquired a 9.8 per cent stake in Vodafone for about $4.4bn, one of many largest investments it had made in additional than a decade.
Vodafone has been in talks to mix its UK operations with its home rival Three UK, the cellular operator owned by Hong Kong infrastructure conglomerate CK Hutchison, in keeping with folks briefed on the discussions.
Source: www.ft.com
