Emirati telecommunications group e& acquires 9.8% stake in Vodafone for $4.4 billion

The Vodafone logo is seen at the Mobile World Congress in Barcelona, ​​Spain, February 28, 2018. REUTERS/Sergio Perez/File Photo

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DUBAI/LONDON, May 14 (Reuters) – UAE-based telecommunications firm e& (ETISALAT.AD) has acquired a 9.8% stake in Vodafone (VOD.L) for $4.4 billion , days after saying it was looking to expand into new markets and related areas such as fintech. Read more

E&, formerly known as Emirates Telecommunications Group, said it made the investment to gain “significant exposure to a global leader in connectivity and digital services”, adding that it had no intention of bid for all of Vodafone.

Vodafone, like other mobile operators, has struggled in its more mature markets, where competition and regulation have driven prices down.

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The group’s net debt has reached 44.3 billion euros ($46.1 billion) and chief executive Nick Read is under pressure to simplify his portfolio and improve returns after a more than 20% drop in the share price. his action since he took office in 2018. read more

Vodafone said it looked forward to building a long-term relationship with e&. “We continue to make good progress with our long-term strategic plans and will provide an update in our FY22 earnings announcement on May 17,” he said in a statement.

E& said it fully supports the company’s current business strategy, as well as its existing board and management team.

“We see this investment as a good opportunity for e& and its shareholders as it will allow us to improve and grow our international portfolio, in line with our strategic ambition,” said CEO Hatem Dowidar.

The Emirati company recently split its business into e&life, focused on consumer services, e&enterprise, providing digital services to government and businesses, and telecom arm Etisalat, which according to its CEO is the seventh largest in the world in terms of market capitalization.

“We are positive on the investment for e& – it enables a better capital structure, supports EPS (earnings per share) growth (and) achieves attractive valuation multiples,” said Ziad Itani, executive director of the equity research at Arqaam Capital.

Although the investment is large, it represents less than 6% of the market capitalization of e&, which also has a healthy balance sheet with a net debt/EBITDA of 0.41 times, he said.

($1 = 0.9605 euros)

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Reporting by Shivani Tanna in Bengalaru, Saeed Azhar in Dubai and Kate Holton and Michael Holden in London; Editing by Jan Harvey and David Holmes

Our standards: The Thomson Reuters Trust Principles.

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