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

By Saeed Azhar and Kate Holton

DUBAI/LONDON (Reuters) -United Arab Emirates-based telecoms firm e& has purchased a 9.8% stake in Vodafone for $4.4 billion, days after saying it was seeking to increase into new markets and associated areas similar to monetary know-how.

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

Vodafone, like different cell 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 Government Nick Learn is beneath stress to simplify its portfolio and enhance returns after a greater than 20% slide in its share value since he took over in 2018.

Vodafone mentioned it appeared 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 Might,” it mentioned in an announcement.

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

“We see this funding as an excellent alternative for e& and its shareholders as it’s going to enable us to reinforce and develop our worldwide portfolio, in keeping with our strategic ambition,” mentioned CEO Hatem Dowidar.

The UAE agency lately separated its enterprise into e& life, targeted on client 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 permits 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 steadiness sheet with internet 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)