UAE-based telecom company E&D bought a 9.8% stake in Vodafone for 4.4 billion, just days after it said it was looking to expand into new markets and related areas such as financial technology.
E&E, formerly known as the Emirates Telecommunications Group, said it had made the investment to achieve “significant exposure to world leaders in connectivity and digital services”, adding that it had no intention of making an offer for Vodafone as a whole.
Vodafone, like other mobile operators, is battling its more mature market, where competition and control have reduced prices.
The group’s net debt has reached 44.3 billion euros ($ 46.1 billion) and since its chief executive Nick Reid took office in 2018, its share price has been under pressure to simplify its portfolio and improve returns after sliding more than 20%.
Vodafone says it is looking forward to building a long-term relationship with e &. “We are making good progress with our long-term strategic plans and will provide an update on our FY22 results announcement on May 17,” it said in a statement.
E&D said it fully supports the company’s current business strategy and its board and existing management team.
“We see this investment as a great opportunity for E&D and its shareholders as it will allow us to grow and develop our international portfolio in line with our strategic ambitions,” said CEO Hatem Douidar.
The UAE firm has recently diversified its business into E&L Life, focusing on providing consumer services, E&E Enterprise, government and business digital services and telecom company Etisalat, which its CEO says is the seventh largest in the world in terms of market capitalization.
Ziad Itani, executive director of equity research at Arcam Capital, said: “We are positive about the investment for E&D – it enables an improved capital structure, supports EPS (earnings per share) growth, and (and) reaches attractive valuation quality.”
Although the investment is large, it accounts for less than 6% of E & E’s market capitalization, which has a healthy balance sheet including net debt / EBITDA at 0.41 times, he said.
(1 = 0.9605 euros)