© Reuters. The Vodafone logo is seen at the Mobile World Congress in Barcelona, Spain, on February 28, 2018. REUTERS / Sergio Pérez / File Photo
De Saeed Azhar and Kate Holton
DUBAI / LONDON (Reuters) – The UAE telecommunications company has bought a 9.8% stake in Vodafone (NASDAQ 🙂 for $ 4.4 billion, days after it said it was looking to expand into new markets. related areas such as financial technology.
E &, formerly known as Emirates Telecommunications Group, said it had made the investment to gain “significant exposure to a world leader in connectivity and digital services,” adding that it had no intention of bidding for the entire Vodafone.
Vodafone, like other mobile operators, has been struggling in its more mature markets, where competition and regulation have pushed prices down.
The group’s net debt has reached 44.3 billion euros ($ 46.1 billion) and CEO Nick Read is under pressure to simplify its portfolio and improve returns after a more than 20% drop in the price of its shares since it took control in 2018.
Vodafone said it hoped to build a long-term relationship with e &. “We continue to make good progress with our long-term strategic plans and will offer an update on the announcement of the results of fiscal year 22 on May 17,” it said in a statement.
E & said it fully supports the company’s current business strategy and 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 expand our international portfolio, in line with our strategic ambition,” said CEO Hatem Dowidar.
The UAE company recently split its e-life business, focused on consumer services, e & enterprise, providing digital services to governments and businesses, and the telecommunications arm Etisalat, which its CEO said is the seventh largest in the world by market capitalization.
“We are positive about investing in e &: it allows for an improved capital structure, supports EPA growth (earnings per share) and (i) reaches attractive valuation multiples,” said Ziad Itani, CEO Arqaam Capital’s capital research.
While the investment is significant, it is 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)