UAE telecoms group e& buys 9.8% stake in Vodafone for $4.4 billion

The Vodafone emblem is seen on the Cellular World Congress in Barcelona, Spain, February 28, 2018. REUTERS/Sergio Perez/File Picture

DUBAI/LONDON, Could 14 (Reuters) – United Arab Emirates-based telecoms firm e& (ETISALAT.AD) has purchased a 9.8% stake in Vodafone (VOD.L) for $4.4 billion, days after saying it was trying to develop into new markets and associated areas equivalent to monetary expertise. learn extra

E&, previously referred to as Emirates Telecommunications Group, mentioned it had made the funding to realize “important publicity to a world chief in connectivity and digital providers”, including it had no intention of constructing a suggestion for the entire of Vodafone.

Vodafone, like different cellular operators, has been struggling in its extra mature markets, the place competitors and regulation have pushed costs decrease.

Internet debt on the group has reached 44.3 billion euros ($46.1 billion) and Chief Govt Nick Learn is below stress to simplify its portfolio and enhance returns after a greater than 20% slide in its share worth since he took over in 2018. learn extra

Vodafone mentioned it seemed ahead to constructing a long-term relationship with e&. “We proceed to make good progress with our long-term strategic plans and can present an replace in our FY22 outcomes announcement on 17 Could,” it mentioned in a press release.

E& mentioned it’s totally supportive of the corporate’s present enterprise technique and its board and current administration group.

“We see this funding as a superb alternative for e& and its shareholders as it should permit us to boost and develop our worldwide portfolio, according to our strategic ambition,” mentioned CEO Hatem Dowidar.

The UAE agency just lately separated its enterprise into e& life, centered on shopper providers, e& enterprise, offering digital providers to authorities and enterprise, and telecoms arm Etisalat, which its CEO mentioned is the world’s seventh-largest by market capitalisation.

“We’re constructive on the funding for e& – it allows an improved capital construction, helps EPS (earnings per share) progress, (and) arrives at engaging valuation multiples,” mentioned Ziad Itani, government director fairness analysis at Arqaam Capital.

Whereas the funding is sizable, it’s lower than 6% of the market capitalisation of e&, which additionally has a wholesome stability sheet with web debt/EBITDA at 0.41 instances, he mentioned.

($1 = 0.9605 euros)

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

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