By Leah Montebello
United Arab Emirates-based Emirates Telecommunications upped its stake in Vodafone to 11 per cent this morning, but dismissed that it would make any grand swoop for the British telecoms firm.
Vodafone’s biggest shareholder, once known as Etisalat Group, upped its stake by one per cent, stating that the rationale for investment was “unchanged” from the original plan, which is to “gain significant exposure to a world leader in connectivity and digital service at an attractive valuation”.
It comes after Vodafone chief exec Nick Read announced on Monday that he would exit the company at the end of December as its share price continues to plunge and investors are left increasingly disgruntled.
After four years at the top spot, Read steered the telecoms giant through the pandemic, narrowing the company’s focus on Europe and Africa, and cutting costs.
Telecoms analyst at PP Foresight Paolo Pescatore told City A.M. that timing of Emirates’ move was likely a coincidence than a calculated strategy.
“The UAE provider is keen to expand beyond its core market. Vodafone’s global and particularly European operations offer plentiful opportunities for both Etisalat and Vodafone to work more closely to bring greater efficiencies and launch new products globally,” he said.
Vodafone’s share price has fallen more than 60 per cent over the past five years, and plunged by about a fifth this year alone compared with a two per cent gain in the FTSE 100.
In recent months, Read has shifted the telecom giant’s focus onto mergers and acquisitions, recently agreeing a co-control deal for its towers business and continuing discussions with Three UK.
However, the company’s weak performance in its largest market Germany and lacklustre appetite for deals in Spain, Italy and Portugal have all spelled danger for Read.
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