Business

Emirates Telecommunications nabs 9.8 per cent stake in Vodafone as it grows international portfolio


(Photo by Ralph Orlowski/Getty Images)

Emirates Telecommunications Group, now known as e&, has acquired a 9.8 per cent stake in Vodafone for $4.4bn (£3.6bn), the companies confirmed this morning.

The United Arab Emirates-based firm e& has been looking to expand into new markets, including Africa and Europe, and group CEO Hatem Dowidar said: “Our investment represents a unique opportunity to acquire a significant stake in one of the leading and strongest global telecom brands, and a company that we know well.

“We are looking forward to building a mutually beneficial strategic partnership with Vodafone with the goal of driving value creation for both our businesses, exploring opportunities in the rapidly developing global telecoms market and supporting the adoption of next-generation technologies.

“We see this investment as a good opportunity for e& and its shareholders as it will allow us to enhance and develop our international portfolio, in line with our strategic ambition”, he added.

It is understood that the telecoms company doesn’t intend to buy Vodafone and supports the company’s board.

City A.M. reported earlier this week that Vodafone, the UK’s third largest mobile network operator, had reignited merger talks with rival network Three.

The two companies floated the idea for a merger last year, but failed to reach a deal, with competition regulation in the UK presenting a significant hurdle for the companies.

Back in March Three UK chief Robert Finnegan signalled towards market consolidation after the mobile giant reported humble revenue growth, despite hitting its strongest contract boom since 2012.

Telecoms expert at Enders Analysis Karen Egan told City A.M. at the time that scale is crucial for mobile operators trying to make a return, and “‘sub-scalers”, like Vodafone and Three, are finding this increasingly difficult.

Vodafone chief Nick Read has also banged this consolidation drum, suggesting that investors would find UK firms more attractive if they were more profitable when combined.

Vodafone has been under increasing strain to speed up its organisational overhaul after it was revealed earlier this year that a notorious activist investor Cevian had taken a stake in the firm.

Despite Vodafone’s recent rejection of Italy’s Iliad and private equity titan Apax Partners’ takeover approach,  it is understood that Cevian are keen for the UK firm to pursue consolidation in key markets.



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