Etisalat buys 9.8% stake in Vodafone for $4.4 bn

Emirates Telecommunications Group (formerly known as Etisalat Group) has acquired 2,766 million shares in Vodafone, representing 9.8 percent of Vodafone, for $4.4 billion.
Vodafone telecom tower
e& has made the investment in Vodafone to gain significant exposure to a world leader in connectivity and digital services.

e& is supportive of Vodafone’s Board and existing management team and its current business strategy announced in November 2021. It does not seek Board representation and is confident about the company’s ability to unlock value from its organic business activity and other strategic transactions.

e& plans to be a long-term and supportive shareholder in Vodafone and is not seeking to exert control or influence the company’s Board or management team. e& has no aim to make an offer for Vodafone Group.

Hatem Dowidar, Group CEO of e&, 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.”


Shares in Vodafone edged higher on Monday as a surprise $4.4 billion investment from the UAE-based telecoms company e& provided a much needed but possibly short-term boost to the British firm’s CEO Nick Read, Reuters news report said.

The company previously known as Etisalat said it became the largest shareholder in Vodafone with a 9.8 percent stake, attracted to its management, its efforts to unlock value and a diversified currency base.

It ruled out exerting control or launching a full takeover.

Analysts were divided however over the group’s long-term plan, after activist investor Cevian and other long-standing shareholders called on Vodafone to simplify its portfolio, repair markets through consolidation and boost returns.

While analysts at JPMorgan said e& could become more activist over time, possibly in conjunction with Cevian, Credit Suisse and Jefferies said the investment could give Read more breathing room to invest in assets and withstand pressure to sell off operations immediately.

“Indeed it could even allow Vodafone to make investment decisions that come at the expense of short term Free Cash Flow generation now that it has an industrial backer with a long term time horizon,” Credit Suisse said.

Jefferies said the presence of e& on the shareholder register could counteract the activist demands, and enable Vodafone to reset consensus demands, knowing that e& could increase its holding and prop up the shares.

Vodafone, with operations across Europe and Africa, said it looked forward to building a long-term relationship with Etisalat and noted that it had continued to make good progress with its long-term strategic plans.

E&, or Etisalat, began life in the UAE but has since expanded into 15 other markets across the Middle East, Asia and Africa. Despite having lower revenues than Vodafone it has higher margins and a market cap of $74.5 billion, almost double the British company. It also has firepower for more deals.

Vodafone, with 66.3 million mobile contract customers in Europe and 188 million in Africa, said earlier this year it would pursue mergers in multiple European markets, saying it believed regulators would be more accommodating as they realised the value of network investment during the pandemic.