Dubai/London, May 15 (BNA): UAE-based telecom operator e& has bought a 9.8% stake in Vodafone for $4.4 billion, days after it said it was looking to expand into new markets and related areas such as financial technology.
E&, formerly known as Emirates Telecom Group, said it had invested “to make a significant exposure to a world leader in communication and digital services”, adding that it had no intention of making an offer for the whole of Vodafone.
Vodafone, like other mobile operators, has been struggling in its more mature markets, as competition and regulation have driven prices lower, Reuters reports.
The group has net debt of 44.3 billion euros ($46.1 billion) and CEO Nick Read is under pressure to streamline his portfolio and improve returns after a more than 20% drop in its share price since taking over in 2018.
Vodafone said it looks forward to building a long-term relationship with e&. “We continue to make good progress on our long-term strategic plans and will provide an update in our FY22 results announcement on May 17,” she said in a statement.
E& said it fully supports the company’s current business strategy and its current board and management team.
“We see this investment as a good opportunity for e& and its shareholders as it will allow us to consolidate and develop our international portfolio in line with our strategic ambition,” said CEO Hatem Dowidar.
The Emirati company recently split its business into e & life, focusing on consumer services, e-services and enterprise, providing digital services to government and businesses, and Etisalat, which its CEO said is the world’s seventh largest by market capitalization.
“We are positive about investing in e& – it enables optimization of the capital structure, supports EPS (earnings per share) growth, (and) it reaches attractive valuation multiples,” said Ziad Itani, Executive Director of Equity Research at Arqaam Capital.
While the investment is significant, it’s less than 6% of market capitalization for e&a, which also has a healthy balance sheet with a net debt/EBITDA of 0.41 times, he said.