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Vodafone investors withdrawing over the last year has opened the door for the Emirati operator group to increase its stake in the business

It is no secret that Vodafone has been facing serious financial pressures recent years, with investors squeezing the multinational operator to implement major changes and turn its fortunes around.

Indeed, for many years Vodafone has been relying on the prospect of consolidation in its most competitive markets ­­– including Spain, Italy, and the UK – to alleviate the financial strain. However, despite rumours (and seemingly progress with Three in the UK), few deals have ultimately been struck, leaving the company’s management to face the ire of its disgruntled shareholders.

By October last year, one Vodafone’s most outspoken investors, Cevian Capital, had sold most of its stake in the company, arguing the operator’s situation appeared unlikely to improve. Just a week ago, another of Vodafone’s activist investors, Coast Capital, was reported as offloading its shares, saying that the strategy behind its initial investment had proven ‘incorrect’.

Not all of Vodafone’s investors appear to be so pessimistic, however.

e&, formally Etisalat, took a near 10% stake in Vodafone back in May last year for £3.3 billion, saying at the time that the opportunity would allow them to “gain significant exposure to a world leader in connectivity and digital services” as well as develop their international portfolio.

Since then, the Emirati operator group has gradually increased its stake in Vodafone, upping its investment to 11% in December last year and reportedly now 12%.

“Executed at what we believe is an attractive valuation, the investment rationale is unchanged from our announcement on the 14th of May 2022, specifically to obtain significant exposure to a global leader, and leverage potential commercial partnerships, and realize a future return on our investment,” explained the operator in a statement.

Etisalat rebranded as e& back in February, splitting its operations into various arms, including e& Life (consumer services), e& Enterprise (enterprise services), and e& Capital (investment). The move was aimed not only at increasing the company’s ability to capitalise on emerging opportunities, but also at expanding into international markets – both of which will seemingly be facilitated by its stake in Vodafone.

For Vodafone itself, meanwhile, major changes are already taking place. Vodafone’s CEO of four years, Nick Read, stepped down from the role at the end of last year and additional executive positions have been reshuffled since the start of the year.

Vodafone’s head of finance, Margherita Della Valle, is serving as interim CEO until a replacement for Read can be found.

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